A computer shows a choice of Web browsers during a press conference at the Residence Palace in Brussels
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The settlement may also establish antitrust regulation as a key driver of innovation and competition in the IT sector. When Microsoft first began trading blows with the European Commission, it took a confrontational approach, as if it never believed it would be tamed by Brussels bureaucrats. But the tussles have cost Microsoft dearly: the E.U. watchdog has fined the company $2.4 billion for illegal business practices over the years. At the same time, the rise of companies like Apple and Google — which both enjoy quasi-monopolies in other technology sectors — creates a new challenge for Microsoft. Indeed, as Microsoft, Apple and Google branch out beyond their core services and into new territory, they have shifted their strategies: instead of fighting regulators, they now want to use them to break into rival markets.
So it comes as little surprise that Microsoft is one of the key complainants in the European Commission's current investigation into software giant Oracle's $7.4 billion planned takeover of hardware-maker Sun. Microsoft is also seeking to halt a Google takeover of mobile-advertising start-up company AdMob.
With technologies increasingly mashing up, Microsoft is also apparently starting to accept the fact that its fortunes are improved when rivals build software and services that fit with its own. "This is a victory for the future of the Web," says Jon von Tetzchner, CEO of Opera, the tiny Norwegian browser company that brought the case against Microsoft to the European Commission. "It is a celebration of open Web standards, as these shared guidelines are the necessary ingredients for innovation on the Web."
Of course, regulators still need to ensure interoperability. Microsoft has a dire record of implementing rulings made by regulators — half its European Commission fines are for failures to abide by E.U. rulings — and some cynics warn the company might "accidentally" put bugs in its systems that cause rival browsers to crash. Thomas Vinje, a lawyer for the European Committee for Interoperable Systems, a group of technology companies that includes IBM, Nokia, Oracle and Sun, says regulators must keep a close watch over Microsoft to ensure it doesn't drag its feet. "Our emphasis on enforcement is based on years of familiarity with Microsoft's inadequate commitments and broken promises," he says. The European Commission has also warned that the company may be fined up to 10% of its yearly global turnover — an estimated $58 billion in 2009 — if it doesn't stick to the terms of the deal over the next five years.
While some competitors remain cautious, Microsoft has pledged its full cooperation. If so, it could mark a new era as the company redirects its business strategy away from maintaining its crushing market dominance and toward something it had fought against for 10 years — greater cohesion with its rivals.