Self-regulation for Vista and all future Windows versions will bolster competition and customer choice.
Microsoft Corp. pledged of late that the company was adopting voluntary principles to guide development of its flagship Windows operating system, including Windows Vista, which will include allowing computer manufacturers to set Google and other non-Microsoft search engines as a default aimed at bolstering choice and competition.
Brad Smith, Microsoft senior vice president and general counsel, said the software giant is committed to creating a transparent system by adopting a voluntary set of principles to guide development of its market-dominating operating system in a manner that allows open competition among software developers and computer manufacturers, and wide choice for customers.
He acknowledged that eight of the 12 principles come from the company’s 2002 antitrust settlement with the U. S. Department of Justice.
"If a computer manufacturer wants to set a competing search service … so that service runs by default, they can do so." In the broadest sense, I am here to pledge Microsoft’s continued commitment to vigorous competition and vital innovation in the software marketplace–and to explain how this commitment is guiding our development of the next-generation Windows operating system, Windows Vista, Smith said in a speech at a luncheon here hosted by the New America Foundation, a Washington public policy think tank that counts Google CEO Eric Schmidt as a board member.
The voluntary principles will come into play after major parts of a U.S. government decree related to the landmark U.S. antitrust case against the software maker expire next year, Smith said. They focus on the freedoms that users, manufacturers and developers can expect in Windows Vista and its successors.
Microsoft signed an antitrust settlement with the U.S. Justice Department in 2002. Parts of the settlement will begin expiring next year, although Microsoft agreed in May to extend one key provision involving licensing of technical data.
Under the principles, users and manufacturers will be free to change any default settings, to install any software and to remove key Windows features as they please, Smith said. Developers will enjoy access to a broader range of application programming interfaces, or APIs, and anyone will be able to license Microsoft’s communications protocol or patents, within certain parameters.
The principles unveiled does not meant to substitute for antitrust law, nor are they as comprehensive as some might like, Smith acknowledged. "We do not pretend these principles answer all questions for all time or even for now," he said.
“Our goal is to be principled and transparent as we develop new versions of Windows,” Smith said.
Microsoft plans to release the next version of Windows, called Vista, to business customers in November before a wider general release in January.
Microsoft’s plan to include a search service to compete with industry leader Google Inc. in its new Windows Vista operating system has caused concern that the two companies may engage in the same kind of legal fight as the Microsoft-Netscape browser war in the late 1990s.
But they reflect the fact that Microsoft has learned a lot in nine years since the U.S. government launched its antitrust probe in earnest, Smith said. Chief among those lessons, he said, is the recognition that Microsoft has "a special responsibility both to advance innovation and to help preserve competition in the information technology ecosystem."
That means, for instance, that if a PC manufacturer wants to ship machines with a competing search engine enabled, that is just fine with Microsoft, Smith said. That statement appeared to be an almost direct rebuttal to concerns raised by Google earlier this year about a search box planned for Internet Explorer 7 in Windows Vista.
“Users can reset settings and choose whatever they want as things go forward,” Smith added.
In addition to allowing manufacturers to set Google and other programmes as a default, the new "Windows Principles" include a promise to let computer makers "remove the means by which end users access key Windows features, such as Internet Explorer and Windows Media Player."
Microsoft also said it would not "retaliate" against computer makers that choose non-Microsoft software and to take other steps to help third party software developers and customers.
US Senator Orrin Hatch, a Utah Republican who describes himself as one of Microsoft’s most vocal critics on antitrust matters, said in a statement he was "encouraged by…the changes they are making to their business model in order to comply with the US consent decree."
Other Microsoft critics were more skeptical.
Ken Wasch, president of the Software & Information Industry Association, said a key factor for software makers is whether Microsoft will charge computer manufacturers less for Windows if they choose to strip out Microsoft’s Internet browser, media player or other software.
“There is no economic incentive whatsoever for the non-Microsoft products to be included by the OEM,” without such price differences, Wasch told Reuters.
Windows Principles
Microsoft has written itself 12 tenets to promote competition associated with its operating system. Excerpt of main areas are here:
Choice for computer manufacturers and customers
- Installation of any software
- Easy access for software makers
- Defaults for non-Microsoft programs
- Exclusive promotion of non-Microsoft programs
- Business terms (no retaliation against PC makers that support non-Microsoft software.
Opportunities for Developers
- Disclosure of APIs
- Freedom of choice in Internet services
- Open Internet access in Windows
- No exclusivity in middleware contracts
Interoperability for Users
- Availability of communications protocols
- Availability of Microsoft patents
- Support for industry standards
Such flexibility should also allow the "phenomenal success" of others, such as Apple Computer’s iTunes software on the Windows platform, to continue, he said.
The principles also include a nod to the hot-button issue of Net neutrality, or the idea that network operators must not be permitted to make deals offering higher priority to Web content and service providers that pay for the privilege.
The principles drew applause on from two Democrats in Congress. Rep. Ed Towns of New York said the document gave him confidence that America’s software industry will continue to see a ray of resurgence in activity. Rep. Jay Inslee, who represents a district in Microsoft’s home state of Washington, said the principles "reaffirm Microsoft’s commitment not only to compliance with government regulations, but also to technological innovation and consumer choice."
Microsoft’s Smith said Vista will be sold to computer makers in five different configurations. He did not offer details how the versions would differ or which Microsoft applications they would include.
“Users are in charge of their own machines,” Smith said. “Microsoft will design and develop and distribute Windows so that computer manufacturers configure it – they get to choose and select the defaults, but users will always be in charge.”
On Net neutrality, Smith promised that Microsoft would "design and license Windows so that it does not block access to any lawful Web site or impose any fee for reaching any non-Microsoft Web site or using and non-Microsoft Web service."
He did not, however, claim that the principles are entirely comprehensive. No mention was made, for instance, of privacy and security because "we did not think those issues belonged as part of competition issues," Smith said. He added that Microsoft devotes the largest chunk of its research and development spending to security.
Directions on Microsoft analyst Matt Rosoff said he suspected that the timing of the announcement was tied at least in part to the European Commission’s action against Microsoft.
In spite of the goodwill Microsoft is seeking to generate with its new principles, the company continues to battle European antitrust regulators.
The announcement comes just a week after the European regulators slapped the company with a 280.5 million euros ($356.6 million) fine for noncompliance with a 2004 antitrust ruling. In addition, several U.S. antitrust-related provisions imposed on Microsoft by a federal court run out in November 2007. The company agreed with federal and state prosecutors in May to extend certain parts of the judgment related to licensing of its communications protocols until 2009.
More generally, Microsoft wants to avoid any more expenses related to lawsuits–these fines and settlements have cut more than $6 billion from the company’s bottom line in the last few years, Rosof said in an e-mail interview. "And I think with organic growth slowing in some of its businesses, Microsoft is more acutely aware of these expenses than ever before."