May 9, 2009 3:00 am

Microsoft says Brussels rulings would give Google dominance

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The European Commission would hand Google greater dominance of the internet search business if it pressed ahead with planned regulations on Microsoft's Windows operating system, the US software group has said.

Microsoft's attempt to drag its arch-rival into its own antitrust battle with Brussels is contained in a confidential last-minute submission aimed at heading off European action, a copy of which was seen by the Financial Times.

The proposed European rules are aimed at diluting the advantage Microsoft gets in the browser market by "bundling" its Internet Explorer (IE) browser with the Windows operating system. The Commission is seeking to force a "must-carry" rule on Windows that would require Microsoft to distribute other browsers with the operating system.

Microsoft questioned in its official response whether the proposal would be legal, since it claimed the rule would harm competition in the separate, but related, internet search market.

Two rival browser companies, Opera and Mozilla, maker of the Firefox browser, have agreements with Google so their browsers automatically default to the search engine, as does Google's browser, Chrome.

Microsoft said if the screen showing computer users their browser choices was created by the PC makers, there would be a chance for Google to work with these manufacturers to get search defaults set in its favour.

Google studiously resisted Microsoft's efforts to drag it into the row, saying only: "We believe greater competition will mean greater innovation on the Web and that is better for consumers."

Microsoft declined to comment.

Microsoft's response was submitted privately last week and sent this week to third parties ahead of a possible hearing in early June.

Microsoft says the Commission is breaching established legal principles that give a company some discretion over how to resolve the situation where illegal tying of products is established.

It contends that a "must carry" remedy could infringe Microsoft's brand rights and impose a potential intellectual property liability

Microsoft's challenge to the proposed "must carry" remedy is a new line of defence. It continues to accuse Brussels of doing insufficient research and is invoking new statistics to show the browser market is not foreclosed.

Microsoft claims its share of the PC browser market in the European Economic Area has fallen from 85 per cent to under 55 per cent in four years, while Mozilla Firefox's share exceeds 45 per cent in some country markets. One rival disputed this, saying Microsoft's IE accounted for 70 per cent of the European market.

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