Microsoft's Brad Smith: European Commission Market Testing Web Browser Choice

Oct. 7, 2009

The following is a statement by Brad Smith, General Counsel, Microsoft regarding the European Commission’s announcement about its decision to market test a set of measures Microsoft has offered to address competition law issues relating to Windows, Office and other high volume products:

Brad Smith, General Counsel, Microsoft

We welcome today’s announcement by the European Commission to move forward with formal market testing of Microsoft’s proposal relating to web browser choice in Europe. We also welcome the opportunity to take the next step in the process regarding our proposal to promote interoperability with a broad range of our products.

Today’s announcement follows our publication of earlier drafts of these two proposals in July and broad feedback from across our industry to the Commission in August. Microsoft then engaged in extensive discussions with the Commission over the last month, during which we agreed to make numerous changes to improve these proposals. For Microsoft, today’s decision is a significant step toward closing a decade-long chapter of competition law concerns in Europe.

Summary of Proposed Understandings

Today’s announcement addresses two sets of measures. The first covers the inclusion of Internet Explorer in Windows and the way this will work in the future in Europe. This proposed measure ensures that PC manufacturers will continue to be able to install any browser on top of Windows and make any browser the default. It also ensures that PC manufacturers and users will be able to turn Internet Explorer on and off. And it ensures, that for the next five years in Europe, PC users who are running Internet Explorer as their default browser will receive a ballot screen that will enable them to easily download and install another browser if they would like. This ballot screen will be displayed automatically. PC users can make any other browser the default if they prefer. They can even turn Internet Explorer off, although there’s no need to turn off Internet Explorer in order to use a different browser or make another browser the default.

The Commission stated today in its formal notice that, subject to market testing, it intends to adopt a decision that makes the understanding described above legally binding on Microsoft in Europe for the next five years.

The second measure is a “public undertaking” that covers interoperability with Microsoft’s products—the way our high share products work with products from our competitors. This applies to an important set of Microsoft’s products—our Windows, Windows Server, Office, Exchange and SharePoint products—and represents the single biggest legal commitment in the history of the software industry to promote interoperability. Microsoft’s proposed undertaking will ensure that developers throughout the industry, including in the open source community, will have access to technical documentation to assist them in building products that work well with Microsoft products. Microsoft will also be required to support certain industry standards in its products and to fully document how these standards are supported. Microsoft’s proposed undertaking will make available legally-binding warranties that would be offered to third parties.

The interoperability undertaking will give full effect to the policy outlined by Commissioner Kroes in a major policy speech given in June 2008. At that time, the Commissioner said that companies offering high-share software products should be required to (i) disclose technical specifications to enable interoperability; (ii) ensure that competitors can access complete and accurate information and have a remedy if not; and (iii) ensure that the technical specifications are available at fair royalty rates, based on the inherent value of the technology disclosed. The interoperability undertaking, developed through extensive consultations with the Commission, would implement this approach in full.

The Commission stated in its announcement today that it welcomes the company’s interoperability initiative. For reasons relating to European legal procedure, this interoperability undertaking follows a different procedural path from the web browser proposal. However, Microsoft will adopt the proposed undertaking in final form upon the Commission’s final adoption of the Internet Explorer commitments.

Proposals Improved After Broad Feedback and Commission Consultations

Since July, the Commission has received extensive feedback on Microsoft’s initial proposals from a wide range of groups including browser competitors, PC manufacturers, and trade and consumer associations. Based on this feedback, Microsoft agreed with the Commission to make approximately 20 substantive changes to our proposals, including changes to:

• Ensure that competing browsers can be downloaded from the ballot screen more quickly and easily.

• Ensure equivalent placement on the Windows 7 taskbar for Internet Explorer and all other browser icons.

• Improve the usability of the browser ballot by adding introductory information, improving the design of the ballot page, and adding a feature to enable users to return more easily to it at a later time if they wish.

• Adjust the placement of the browser choices on the ballot screen so that Internet Explorer is no longer listed first. Instead, the five most popular browsers will be listed in alphabetical order by vendor, followed by the next seven most popular (also alphabetical), so that 12 choices are displayed in total.

• Adopt suggestions from competitors to strengthen Microsoft’s obligations to publish documentation about the company’s interoperability technology.

• Address security software vendor feedback by ensuring disclosure of certain programming interfaces accessed by Microsoft’s own security products.

As we’ve said before, the steps described above will require significant change within Microsoft. We believe that these are important steps we should take in order to resolve the Commission's competition law concerns.

Today is an important day. Although the European Commission has not made its final decision, today’s news is a major step forward, and we’re hopeful this will help move us towards closure to the past and the building of a new foundation for the future.