Regulators in the EU today announced that they are opening two new investigations against Microsoft, this time focusing not on peripheral functionalities like media players, but on the core of Microsoft's business: its operating and office suite software. The investigations are in response to a recent complaint filed by Norway browser developer Opera Software ASA and a 2006 complaint brought by the European Committee for Interoperable Systems (ECIS), which includes Microsoft rivals IBM, Nokia, Sun, RealNetworks and Oracle among its members.
Both investigations focus on the benefits that Microsoft gains by combining features, such as search and Windows Live, into its operating system. But the investigation sparked by the Opera complaint also includes some novel and interesting features, based upon Opera's contention that Microsoft's failure to conform Internet Explorer to prevailing open standards puts its competitors at a disadvantage (Opera also asks that either IE not be bundled with Windows, or that other browsers, including its own, should be included as well, with no browser being preset as a default).
The investigations will also look into whether Microsoft has failed to adequately open OOXML, or to take adequate measures to ensure that Office is "sufficiently interoperable" with competing products. This would seem to indicate that Microsoft's strategy of offering OOXML to Ecma, and then ISO/IEC JTC1, may fail to achieve its objective, whether or not OOXML is finally approved as a global standard.
Why? Perhaps because of Microsoft's heavy-handed actions during the review period that ended – unsuccessfully – on September 2. And perhaps also because Microsoft has refused to implement ODF, consigning the marketplace to a web of imperfect converters and translators that are likely to always result in more complex Office documents being slightly less than perfect when converted into other word processing suites. By sticking exclusively with OOXML, Microsoft has been pursuing a high risk, high wire act ever since ODF was adopted by Massachusetts in 2005. Today, it appears that this strategy just become riskier.
While neither the progress nor the final resolution of these types of investigations are rapid (the last round took nine years, from start to finish), they do put pressure on the company under investigation to watch its step, not only in the particular ways identified by the investigators, but also in general, because they know that they are being watched by a regulator that is willing to act.
That said, unless the EU gets tougher and moves faster than in the case of the previous investigation, Microsoft may not feel under enough pressure to actually make changes in the way that it does business. If you compare the growth in its revenues and profits during the period of the last investigation with the total fines, it clearly did quite well financially by protracting the process as long as it could.
There are two differences this time around, however, that raise the stakes dramatically: first, the EU now has precedent on its side, from the last prosecution, and second, the products and technology under examination comprise two thirds of Microsoft's revenues, and most of its profits - as well as its future prospects on the Internet, where it is being challenged by powerful rivals.
Finally, It will be very interesting to see how this announcement impacts Microsoft's behavior in the final round of its efforts to have OOXML be approved as an ISO/IEC standard. On February 25, delegations from 40 countries will meet in closed door sessions for five days in Geneva, Switzerland, at a "Ballot Resolution Meeting" to review Microsoft and Ecma's proposed resolutions of the 3,522 comments registered against OOXML. Microsoft may well be much more willing to compromise almost everything in an effort to get final approval for OOXML, in order to bolster its position that it has opened up OOXML.
That will be a bit of a red herring, however, because OOXML is first and foremost a literal description of Office. By approving it as a standard, ISO/IEC would in large part simply codifies Microsoft's product design, and call it a standard. Because Microsoft did not implement ODF, all other office suites will remain at a disadvantage.
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