Europe launches antitrust hit on Microsoft in excess of web browser

European regulators have launched a astonish new attack on Microsoft of the Internet Explorer browser in its Windows operating system,opening the way for rivals including Google to make inroads into a core part of its business.

The case is a direct echo of the first big Microsoft antitrust battle, when the US accused it of unfairly blocking internet pioneer Netscape during the "browser wars" of the mid-1990s.
If the latest regulatory attack is successful, European internet users could find it more convenient to use browsers other than Internet Explorer, which emerged as the industry standard after Netscape was defeated.
The browser has returned to the forefront in the struggle for dominance on the web, given the ability of browser companies to steer users towards their own online services. Also, with software applications increasingly having both online and PC-based elements, the browser has come to be seen as a strategic piece of software, prompting Google to launch Chrome last year.
The complaint from European Union regulators came in a statement of objections privately sent to Microsoft on Thursday. After Microsoft disclosed the existence of the complaint late yesterday, the European Commission confirmed its objection.
It said its preliminary conclusion was that the "bundling" of Internet Explorer with Windows harmed competition, undermined product innovation and ultimately reduced consumer choice.
A similar objection was lodged in the US 12 years ago and settled at the start of this decade, although the remedies that were forced on Microsoft did little to dent its dominance of the business, at least until recently.
The European charges were prompted by a complaint from Opera, a Norwegian browser maker, which took advantage of a landmark European ruling against Microsoft in 2007 to make its case. In that case, Europe's Court of the First Instance ruled against Microsoft's practice of "tying" its Media Player software with Windows, a move that opened the way to similar attacks on other software.
The European regulators' latest attack seeks to turn Windows into a distribution vehicle for other companies' software, one person familiar with the statement's contents said. Under that arrangement, Microsoft would have to include rival browsers with Windows alongside Internet Explorer, thereby giving users a choice.

Is Google Talking Trash to the European Commission Over Internet Explorer?

So Microsoft is again being called to the anticompetitive carpet by the European Commission (Wall Street Journal pay wall), this time over the bundling of its Internet Explorer Browser with its Windows operating system. Shocking.
In a piece detailing how Microsoft and the EC got to this point, my Microsoft Watch colleague Joe Wilcox points out that the commission started the browser investigation following a complaint filed by browser also-ran Opera.
However, he wonders whether or not Google lobbied the EC to come down on Microsoft as well. As if the EC needs to be told to go after Microsoft after 5 years of persistent opposition.
Why would Google complain about IE? Because its own Chrome Web browser is struggling to gain share versus Microsoft IE, which is at 69 percent and Mozilla Firefox, which is about 20 percent. Since September, Google's Chrome has garnered a meager 1.1 percent share of the browser market.
Google needs all the help it can get to buoy Chrome versus those rivals. If Opera can complain, why can't Google? If Moreover, if Google did in fact lodge a complaint with the EC, it would be simply repaying Microsoft the favor.
Remember, Microsoft threw a conniption when Google bid to buy DoubleClick, fighting hard to convince the Senate that the buy would make Google too powerful to fight in the market. Microsoft last year then opposed Google's agreement to partner with Yahoo over paid search for the same reasons.
Joe Wilcox has an answer for why Google should think twice about griping about Microsoft to the EC:
Some advice to Google: The cop you help to get Microsoft will one day come after you. In Sept. 2007, I warned that the European appeals court ruling against Microsoft would embolden EU regulators. Google is a bundler, too, by tying search and other services together with Chrome--and the company has monopoly-size search share in Europe. When the next chapter of the European drama unfolds, many Google may wish they had stood with Microsoft rather than against it.
While I appreciate Joe's sentiment -- it's nice to think that U.S. companies might stick together in the face of European regulators -- it's not the reality. Competition between Google and Microsoft is downright dog-eat-dog and Darwinian.
Microsoft, which has been roasted by U.S. regulators every bit as much as the European watchdogs, doesn't think twice about complaining about Google in search and advertising because it is an area where it is infinitely inferior to Google. Any little edge it can gain is a place.
Moreover, it's still doing so: According to Ad Age, Microsoft is an underwriter of a recent International Advertising Association survey concerning search-advertising competition, the Google-Yahoo deal and future attitudes about regulatory action.
Why would Google miss a chance to gouge Microsoft abroad over IE when Microsoft nary misses a chance to gouge Google over paid search at home? Just as Microsoft bows to Google in search, Google looks up at Microsoft's IE market share mountain. Turnabout is fair play.
I have no evidence Google is griping about IE in Europe, though it wouldn't surprise me and I fully expect it. Regulatory bodies would likely view complaints from a giant like Google with a grain of salt, much like they viewed Microsoft's gripes about Google. But it can't hurt to try.
I've asked Google for comment, but don't expect to hear much on this front. I won't take offense; this clandestine competitive throat-cutting is fun to dish about.

Apple, Yahoo boards face denigration

By raising as many questions as it answered, last week's announcement that Steve Jobs will take a six-month medical leave has sparked fresh denigration from those who say Apple's board seems more worried with shielding the charismatic chief executive's privacy than with meeting its responsibility to shareholders.

Critics have often accused corporate boards of being too deferential to management or ignoring stock owners' best interests. Last year, some investors accused Yahoo's directors of failing to meet their fiduciary duty by allowing then-CEO Jerry Yang to reject Microsoft's offer to buy the company at a huge premium.
While the circumstances were different, both boards have been too submissive, charged Darren Chervitz, co-manager of the Jacob Internet Fund, which owns shares in both Apple and Yahoo. "If their job is to look out for shareholders, they're not doing a good job of it."
Governance experts say corporate directors' first obligation is to make sure a company is operated in the best interest of its owners. Recent regulatory reforms have attempted to reinforce the role of directors as independent overseers, rather than simply advisers to management, by providing that outside directors meet independently and serve on committees that oversee audits and compensation.
But experts also said there is not a checklist of rules that tell corporate boards how to handle the kinds of situations that Apple and Yahoo faced.
In addressing .

Jobs' health problems, Apple has offered only terse statements that at times seemed to conflict with previous announcements. Critics point to the way Apple disclosed Jobs' medical leave as a sign the board is giving him too much leeway in determining his own fitness and deciding who will run the company, while depriving shareholders of relevant information.
The announcement came Wednesday in the form of a brief memo from Jobs, which said that "during the past week I have learned that my health-related issues are more complex than I originally thought."
"The fact the announcement came from the CEO and not from the board tells you a lot,'' said Nell Minow at the Corporate Library, a research group that advocates for governance reforms. Citing past episodes involving Jobs' generous stock compensation and an investigation into back-dating allegations, she added, "this is a board that has repeatedly had problems exercising independent oversight."
"The board should drive this process," not Jobs, agreed Charles Elson, a professor at the University of Delaware's Center for Corporate Governance.
But some experts said that, while the board should insist that Jobs keep them informed of his health, it may not have a duty to disclose details if directors are satisfied they aren't relevant.
"From my perspective, much of this criticism is based on speculation," said Joseph Grundfest, co-director of the Rock Center for Corporate Governance at Stanford. "Much of this depends on what the board knew and when did they know it."
Investment banker Gary Lutin, who has served on several corporate boards, added that directors must balance shareholders' right to know against perhaps needlessly panicking investors, customers or employees.
Critics also have complained that Apple's board has failed to articulate a plan for replacing Jobs in the event he is not able to return to work full-time.
"Sadly, this board of excellent people seems to get caught up in the emotional vortex of protecting and sympathizing with their legendary and beloved CEO," said Jeffrey Sonnenfeld, an associate dean at Yale University's School of Management. Apple's eight-member board includes such luminaries as Al Gore, Google chief executive Eric Schmidt and Avon chief executive Andrea Jung, in addition to Jobs himself.
Apple declined comment Friday. A spokesman said the company has a succession plan for the chief executive's job, but the plan is confidential.
Governance experts also are divided over the role of Yahoo's board in last year's unsuccessful buyout talks. Like Jobs, Yang's reputation and identity is closely tied to the fate of the company he co-founded. Some critics have argued that the board should have formed a committee of independent directors to handle the Microsoft bid, rather than allowing Yang to play a leading role in negotiations.
Yang was chief executive and a board member when Yahoo rejected Microsoft's offer to buy the search company for $33 a share, or roughly $47.5 billion, saying the price was too low. The stock was trading at just under $29 at the time of Microsoft's last offer; it's now below $12.
At one point, Yang and co-founder David Filo met with Microsoft executives to discuss their offer, with no other Yahoo directors present. But board chairman Roy Bostock publicly backed Yang throughout the negotiations.
Shareholders voiced their displeasure, however. More than a third voted against retaining Yang and Bostock as board members in August. Three months later, Yang announced he would step down as chief executive.
Board members have an obligation to evaluate whether the chief executive has personal or financial motivations that present a conflict of interest to such negotiations, but the question is ultimately up to the board's judgement, said Michael Klausner, a professor of business and law at Stanford, who added that he wasn't commenting specifically on the Yahoo case.
"The role of the board is oversight, but not necessarily to second-guess, unless there's a red flag," Klausner said.