While Microsoft is putting its finishing touches on its next generation of Windows operating system, named Vista, it recently came to light that Europeans might not be able to gain access to Microsoft's latest product.
The European Commission has told the company this year that Vista - the successor product to Windows XP - could violate European competition rules. The Commission's main argument seems to revolve again around the issue incorporating additional security, document reader and privacy utilities
At the Commission's request, Microsoft started a review of Vista with the main aim of avoiding the initiation of antitrust proceedings. The company has proposed changes to the design of the product in various areas of concern.
Yet the company till now has not been given the green light for Vista's launch, with the EU Commission maintaining that it is not required to give a go-ahead. During the last few months a tit-for-tat situation has arisen, with both Microsoft and the Commission blaming each other for the possible delay of the Vista launch.
Microsoft has to date already had its share of problems with the Commission. The legal battle dates to 2004, when Brussels hit the company with a €500 million antitrust fine and required changes in its business practices.
For this reason Microsoft is this time seeking the prior consent of the Commission, ensuring a smooth Vista launch.
Nevertheless, the Commission has not been forthcoming in this regard, claiming to protect the interests of the consumers and other players in the industry who feel threatened by Vista. Brussels fears that the new product will undermine competitors in the field, since it will include, apart from the operating system itself, some other 'bundled' programs, which are to date marketed by Microsoft competitors as stand-alones.
In recent days, the whole saga was given another twist when a cross-party group of European Parliamentarians wrote to the EU Competition Commissioner Neelie Kroes to express their concerns. They maintained: "It is alarming that one of the world's most successful technological companies considers the European Commission's attitude a 'risk factor' that might delay European companies' access to future Microsoft products, such as Windows Vista."
It would appear that ultimately the end loser of an indefinitely delayed Vista launch will be the European consumer. Indeed, when back in 1998 the US Justice Department was working on a major lawsuit against Microsoft, the then chief financial officer of Microsoft, Greg Maffei, had noted that any lawsuit aimed at Windows 98 could have led to "broad, negative consequences" for the entire personal computer industry.
This has been restated by four European Parliament MEPs who, in a letter to the Commission, explicitly pointed out that a delay could have grave economic consequences: "This would put European companies at a competitive disadvantage with every other company around the world who does not have access to these new technologies.
"This effectively means that the Commission's actions are endangering the ability of European business to compete globally."
Retail versions of Vista are planned to be launched next January, and large corporations are set to receive final versions within the next two months. With such a short timeframe at hand, a solution to the Vista issue is paramount.
The Commission's ambiguity has prompted concern among European small to medium-sized business, in view of the potential delay in Vista's release within Europe, and hence placing them at a competitive disadvantage with the rest of the world.
This scenario seems significantly incoherent with the EU Lisbon Agenda and its goal of making the Community the most knowledge-driven economy in the world.
Why is Microsoft having so many problems within Europe? On the surface there appears to be much in common between competition law in the US and the EU. Article 81 of the EC treaty, which prohibits agreements that distort competition, is more or less comparable to section 1 of the US Sherman Act, which prohibits agreements that restrict trade.
Article 82 of the EC treaty prohibits abuse of a dominant position and is roughly comparable to section 2 of the Sherman Act, which prohibits monopolisation or attempts to monopolise. US and EC competition systems also have familiar objectives. Both seek to protect the interests of the consumer and ensure that the respective internal markets are not distorted in any way.
However, the respective competitive systems have actually developed differently in substance. On closer examination, significant variations in law, policy and enforcement become evident.
A particular difference is that in Europe the infringement procedure suffers from the fact that the Commission takes the role of investigator, prosecutor and judge in the same proceeding, while in the US this is not the case.
Critics have questioned for some time whether such a combination of roles is effective and impartial. Commission decisions imposing fines have rarely been accepted by undertakings concerned and have usually been appealed (vide Microsoft's own appeal against the 2004 fine at the Court of First Instance).
In fact, only a limited number of decisions have been upheld in their entirety by the European courts.
The differences between EU and US competition law are also based on the fact that EU competition law is driven by the European belief in the importance of fairness and the development of an integrated European market, while US antitrust law tends to be driven by the American belief in the importance of market-determined efficiency.
There is risk that Microsoft will have to postpone the launch of Vista. In its so-called "10k filing" before the US Securities and Exchange Commission at the end of August, it noted: "Pending resolution of Microsoft's appeal (to the European Court of First Instance), there will remain uncertainty about the legal principles that govern product design and delay dates for Windows or other products."
The European Commission thus has left everyone, starting from Microsoft itself, the business community and the general public in limbo!
Mr Cuschieri is a research executive with Impetus Europe Consulting Group