Microsoft has been formally charged with monopoly abuse by Europe's top anti-trust authority, the European Commission, over the way it bundles the IE browser with Windows.
The move follows an unsuccessful attempt by US authorities nine years ago to strip Internet Explorer (IE) of its unfair advantage over competing browsers. European authorities were more successful in their prosecution of Microsoft over similar anti-trust offences five years ago, fining the company over €1.6 billion and ordering it to change the way it does business.
The Commission's charges were delivered to Microsoft's headquarters in Redmond in the form of a formal statement of objections. The company is studying the charges and will respond within the next two months, as is usual in European antitrust cases, it said.
The new charges are the first of many anticipated against the company in the wake of a failed court appeal by Microsoft last year against the original European anti-trust ruling.
The latest statement of objections follows a relatively short investigation, one year long, sparked by a complaint from Opera Software, a Norwegian browser developer.
Opera CEO Jon von Tetzchner welcomed the Commission's decision to press charges. "It's clear they are taking this very seriously," he said.
However, he still doesn't know if the Commission pursued both aspects of his company's complaint against Microsoft: In addition to complaining about the bundling of IE into Windows, Opera also pointed out that the software giant was undermining open software standards on the Internet.
"Its a problem for companies like ours if Microsoft doesn't support the open standards we all apply, because many Web sites are designed to work with IE, which means our browsers won't always work out of the box," he said.
IE is still the most widely used internet browser, although its market share dipped below 70 percent globally in 2008, according to web analytics company Net Applications. In December, Opera's share was around 0.71 percent.
Von Tetzchner said he hoped the Commission doesn't apply the same remedy it did in its last ruling, when it ordered Microsoft to offer a second version of Windows alongside the regular version of the software, but without a bundled copy of Windows Media Player .
Microsoft complied with the ruling but no one bought the unbundled version, which was sold for the same price as the version with Windows Media Player included.
"That's not really what we are looking for as a remedy for the bundling of IE," von Tetzchner said, adding: "The only way to give users a genuine choice is to strip out IE from Windows and either replace it with a rival browser or offer users a list of browsers to choose from."
The latest anti-trust charges against Microsoft almost certainly won't be the last.
At the same time it opened the investigation into the bundling of IE, the Commission also opened a separate probe to see whether Microsoft withholds information from companies that want to make products compatible with its Microsoft Office productivity suite.
It is also looking for interoperability problems with Windows server products and Microsoft's .Net software framework, following a complaint by the European Committee for Interoperable Systems (ECIS), a trade group representing companies including IBM, Sun Microsystems, Oracle, Red Hat and Opera.
This separate probe is ongoing, said Jonathan Todd, a spokesman for the Commission.
ECIS said Microsoft deliberately withholds interoperability information in order to put rival software companies at a disadvantage; and bases its complaint on the part of the earlier European anti-trust ruling that found Microsoft guilty of withholding interoperability information about its Windows server operating system.
"There was a fear that the Commission might be moving on to other battles, having won a resounding victory over Microsoft already," said Thomas Vinje, legal counsel for ECIS, citing other powerful technology companies such as Intel that are the subject of escalating antitrust battles in Europe.
But the fact that the Commission is pushing ahead with the IE case "makes me more optimistic it will press charges in the interoperability case," he said.
The real fight with Microsoft is only just beginning, though. The remedies the Commission demanded in the first anti-trust case against Microsoft were largely ineffectual, especially on the bundling side. The true value of that case lies in its power of precedence and can only really be appreciated by lawyers and judges, Vinje said.
The cases that follow, including the IE charges, the interoperability case and possibly others, will be much more significant for consumers and competitors than that first antitrust ruling.
On the bundling side, the Commission is unlikely to make the same mistake it made the first time, and will most likely demand that IE is stripped out of Windows entirely, instead of calling for two versions of the operating system as it did before.
Meanwhile, if the Commission presses charges in the new interoperability case championed by ECIS it could break down the biggest barriers preventing open source operating systems such as Linux from competing with Microsoft on personal computer desktops.