In its "Statement of Objections" against Microsoft, the EC claimed it has collected evidence confirming that the software colossus continues the monopoly abuses it was first accused of in 1998. The Commission believes the practice of bundling software like Media Player within Windows "weakens competition on the merits, stifles product innovation and ultimately reduces consumer choice."

Further, the EC is seeking to impose disclosure obligations that would allow Microsoft's competitors in low-end server software to achieve "full interoperability with Windows PCs and servers." Mandated interoperability would ensure that competing server operating platforms could become full participants in such a network. This includes requirements that platforms built by competitors such as IBM and Sun can do the same user authentications as servers running Microsoft software, for example.

Microsoft will have "a last opportunity to comment before the Commission concludes the case," Mario Monti, the EC's competition commissioner, said in a statement last week. The Redmond, Wash., company will have a month to prepare its response. The EC is expected to deliver its final ruling early next year. "We are determined to ensure that the final outcome of this case is to the benefit of innovation and consumers alike," Monti said.

A spokeswoman said Microsoft is examining the contents of the EC statement thoroughly. "We will not speculate on possible outcomes or the suggested remedies of the Commission," she said, "but will continue to focus our efforts on responding to the Commission's concerns."

The unbundling remedy, if successful, could establish an important precedent, said Thomas Vinje, a Brussels-based lawyer representing the Computer and Communications Industry Association, opening the door for other challenges to Microsoft's practice of tucking software-such as Instant Messenger, Outlook and Movie Maker-into its Windows OS.

"The proposed remedies for interoperability and bundling issues are . . . designed to change the competitive landscape," Vinje said. "If you eliminate the weapon of bundling from Microsoft's arsenal of antitrust behaviors," an enforcer like the EC could bring meaningful changes to the industry, he said.

At the same time, Vinje said the EC action may have come too late. The Commission launched its original case against Microsoft in 1998, when Microsoft had a 39 percent share in the server market. Today, the company enjoys a 70 percent share. "You need to move fast in an antitrust case," he said.

The unbundling of Windows Media Player could have implications that go far beyond a simple debate over which proprietary media codec wins on a desktop-the Microsoft version, or RealNetworks' Real players or Apple Computer's QuickTime.

It could also affect the design of servers, where encoded digital media content is stored for streaming, and of consumer electronics products such as gateways, set-top boxes and DVD players, which are being equipped to play back digital content that's available on the Internet.

Of code and icons

In some ways, the EC is traveling the same path as the U.S. Department of Justice, whose high-profile case against Microsoft revolved around the bundling of Internet Explorer in Windows. Like the U.S. antitrust effort, which accused Microsoft of using its Windows dominance to make Explorer the de facto standard in browsers, the European body is accusing the software giant of abusing its OS monopoly to shoehorn Windows Media Player onto every desktop.

In its compromise agreement with Microsoft, the U.S. required the company to simply hide the icons for the Internet browser and Media Player. "What's important is not the icon on a desktop, but the code on the machine," said Brussels attorney Vinje. The EC, by contrast, is asking for a full unbundling of Media Player or the bundling of rival products.

Server interoperability, meanwhile, was not a part of the U.S. government's original case against Microsoft, Vinje said. Rather, "the interoperability issue was thrown in as an afterthought during the settlement negotiations," he said. Although the settlement included requirements aimed at making it easier for other brands of server software to operate with Windows, "it was so vaguely formulated that it has not led to any disclosure," Vinje claimed.

In its investigation, the EC said it contacted a large number of randomly chosen content owners, content providers and software developers across Europe and the United States, and found that "the ubiquity of Windows Media Player on PCs artificially skews their development incentives in favor of Microsoft."

To reach the broadest audience, content owners and providers are inclined to encode their content in the Media Player format rather than, say, MPEG-4 or the emerging H.264 codec, Vinje said. As long as Media Player continues to ride Windows' shirttails, he said, "the game is over" for other media player companies.

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