The European Commission has settled its antitrust concerns with Microsoft, accepting the company's proposal to offer PC buyers a choice of browsing software.
The decision means the software giant's undertakings to increase browser competition are legally binding, the Commission said in a statement on Wednesday. Microsoft's proposal, announced in July, is to present users with a 'ballot screen' of browsers to install in addition to, or instead of, Microsoft Internet Explorer.
"Millions of European consumers will benefit from this decision by having a free choice about which web browser they use," said competition commissioner Neelie Kroes in the statement. "Such choice will not only serve to improve people's experience of the internet now but also act as an incentive for web browser companies to innovate and offer people better browsers in the future."
The ballot screen, which offers PC owners a choice of Firefox, Chrome, Opera and other browsers, will be available to European users of Windows XP, Windows Vista and Windows 7 for five years via Microsoft's Windows Update mechanism.
In addition, the settlement means that computer makers are now able to set competing browsers as default and to turn IE off.
The ballot screen, which the Commission began market-testing in October, is designed to address the European regulator's concerns that competition was distorted by the bundling of Internet Explorer with Windows.
This bundling offered an artificial distribution advantage not related to the merits of the product, and created artificial incentives for software developers and content providers to design their products or websites for IE, the Commission has said.
The decision, which does not rule on whether there was an infringement of antitrust law, concludes a two-year Commission investigation of Microsoft's browser practices.
Microsoft welcomed the settlement on Wednesday. "We are pleased with today's decision by the European Commission, which approves a final resolution of several longstanding competition law issues in Europe," Microsoft general counsel Brad Smith said in a statement.
"We are embarking on a path that will require significant change within Microsoft. Nevertheless, we believe that these are important steps that resolve these competition law concerns."
The software company will report regularly to the Commission, starting in six months' time, and may make adjustments to the ballot screen if the regulators request it. The Commission will review the commitments in two years.
If Microsoft were to break the deal, the European regulators may impose a fine of up to 10 percent of the company's total annual turnover, without having to prove any violation of EU antitrust rules, the Commission said.
Browser maker Opera, which urged the Commission to investigate the matter in 2007, also welcomed the decision, saying it would increase competition and compatibility between different browsers.
"This is a victory for the future of the web," said Opera chief executive Jon von Tetzchner, in a statement. "This decision is also a celebration of open web standards, as these shared guidelines are the necessary ingredients for innovation on the web."
Also on Wednesday, the Commission accepted Microsoft's proposal to disclose interoperability information for several of its key products, although the competition regulator said it is continuing its antitrust investigation on this issue.
Microsoft's requirement to provide interoperability information to competitors dates back to a 2004 antitrust ruling, which carried with it a fine of €497m (£445m). In 2008, the Commission fined Microsoft €899m for failing to comply with the 2004 ruling.
The software maker has agreed to make public an improved version of the proposals it made in July this year, related to the disclosure of interoperability information. It is also releasing documents such as a warranty agreement and a patent licence agreement.
"Under this undertaking, Microsoft will ensure that developers throughout the industry, including in the open-source community, will have access to technical documentation to assist them in building products that work well with Microsoft products," said Smith in the company's statement.
"Microsoft will also support certain industry standards in its products and fully document how these standards are supported."
While the Commission's investigation concerned with interoperability is ongoing, the body said it welcomed Microsoft's initiative.
"Even though it remains informal vis-à-vis the Commission, Microsoft’s public undertaking offers assurances to third parties that can be privately enforced," the Commission said in its statement.
"The Commission will carefully monitor the impact of this undertaking on the market and take its findings into account in the pending antitrust investigation regarding interoperability."