European Commission Probing Microsoft

The panel is investigating whether the Windows 2000 products are designed in a way that discourages competition.
Author:
Publish date:

The

European Commission

said Wednesday that it was investigating whether the new Windows 2000 computer operating software from

Microsoft

(MSFT) - Get Report

violated the European competition laws.

The commission's investigation could raise even more problems for the software giant, which is already locked in a battle in the U.S. with the

Department of Justice

.

Microsoft's shares fell Wednesday, dropping 3 1/4, or 3%, to 106 5/8 by early afternoon. (Shares closed down 5 9/16, or 5.1%, at 104.)

The commission is investigating whether the new Windows 2000 suite of software products is designed in a way that discourages competition.

The commission's competition directorate generale has requested that Redmond, Wash.-based Microsoft provide information regarding some of the technical aspects of the new office suite of software. Microsoft has four weeks to reply to the request.

Microsoft said it would cooperate with the investigation and that the probe would not delay the launch of Windows 2000, scheduled for Feb. 17.

The EU is investigating allegations by users that Microsoft, through Windows 2000, has bundled its PC operating system with its own server software and other Microsoft software in a way that permits only Microsoft products to be fully operable through the new operating system, according to the EU.

If that is the case, Microsoft's actions would put its competitors at a disadvantage while extending the software giant's already dominant position in the PC operating system category, the EU said.

"Past experience leads me to believe that this isn't going to stand in the way of Windows 2000 being a big success," said Christopher Galvin, analyst with

Chase H&Q

. He rates the stock a buy; his firm has not done any underwriting on behalf of Microsoft.

In the U.S., the Justice Department has accused Microsoft of trying to strangle competition in the market for Internet browsers by bundling its Explorer browser with its Windows operating system. In November, a federal judge found that Microsoft wields monopoly power in the market for computer operating systems.