SEATTLE (Reuters) - Microsoft Corp. (MSFT.O), already grappling with a U.S. government antitrust lawsuit, faced more legal woes on Wednesday after the European Union launched a probe of the software giant's new $1 billion operating system. The investigation will look at whether Windows 2000 breaks EU competition law by allowing Microsoft to unfairly extend its dominance in personal computers to servers -- the workhorse machines that are the foundation of the Internet and business networks. EU Competition Commissioner Mario Monti said in Brussels that the complaints allege Microsoft bundled the operating system with other software in such a way that only its own products are fully interoperable, and that puts rivals at a disadvantage. The complaint, brought by end-users, small computer businesses and Microsoft rivals, alleges that by controlling the server computers that run networks, Microsoft could ultimately have a powerful grip over electronic commerce and the Internet economy. Redmond, Wash.-based Microsoft defended the system, saying it was confident the EU would find it had complied with competition law, and said the case would not hold up the roll-out of Windows 2000. "We have no reason to think that this will have any impact on the launch of Windows 2000, or any impact at all eventually," Microsoft spokeswoman Erin Brewer said by telephone from company headquarters in Redmond, Wash. Microsoft general counsel for international sales and support Brad Smith said Windows 2000 was interoperable with other server operating systems. "We have shared a wide array of technical information about Windows 2000 broadly with software developers, customers and competitors long before the product was ever released," Smith said in a statement. If the allegations were proven, the EU's executive commission said it could force Microsoft to make changes to Windows 2000 or face fines of up to 10 percent of global revenues if it failed to do so. Nearly a quarter of Microsoft's second quarter revenue of $6.1 billion came from Europe, up 14 percent from the same period a year earlier. The probe cast a shadow over the long-awaited launch of Windows 2000, which Microsoft touts as a more stable and secure platform for business and network computers, and which is set to be unveiled on Feb. 17 by Microsoft Chairman Bill Gates. It is also the latest legal headache for Microsoft, which is defending itself from a U.S. Justice Department lawsuit alleging it abused monopoly power in operating systems for to crush rivals and stifle competition. Shares in Microsoft, the world's biggest software company, fell 5-15/16, about 5 percent, to 104 on the Nasdaq on Wednesday. Analysts said it was too early in the probe to tell what the impact might be on the company, but noted that with its bulging war chest, Microsoft would have little trouble fighting a second legal front. "When you've got $20 billion in cash, you can pay a lot of lawyers to handle things for you and not distract your top executives from what they're doing," said Michael Schroeder, an analyst with Wasmer, Schroder & Co., an investment research firm in Naples, Fla. The EU's Monti said a formal request had been made to Microsoft to supply the commission with information by the beginning of March. Microsoft said it looked forward to doing so. Microsoft also lashed out at rival Sun Microsystems Inc. (SUNW.O), which Microsoft said had filed a complaint with the commission last year against Windows 2000. "Instead of competing in the marketplace, Sun continues to call for governments around the world to regulate more heavily the software development process," Smith said. "We do not believe (such regulation) would serve well the fast-paced technological innovation that is today the driving force of the world economy." Schroeder said such complaints might become more common in Europe, where the way of doing business often clashes with the turbocharged brand of capitalism found in the United States. "This is the kind of thing that we should not be surprised to see going forward," Schroeder said. "The EU has been exhibiting a variety of different traits that collectively are not friendly toward American business interests," he said, pointing to recent woes U.S. businesses like banana seller Chiquita and soft drink maker Coca-Cola have suffered in Europe. To unsubscribe from SURVPC send a message to [EMAIL PROTECTED] with unsubscribe SURVPC in the body of the message. Also, trim this footer from any quoted replies. More info can be found at; http://www.softcon.com/archives/SURVPC.html
