Letter Charges Illegal forced sale of MS Windows, EC Says Not Likely

Below is a letter sent off to the European Commission, followed by their response, regarding the linking of Windows to hardware sales and the inability to obtain a refund from hardware manufacturers when the user does not wish to use the pre-installed Windows operating system.

Dear Secretary General,

Dear Ms Day,

I am writing to make a formal complaint concerning the forced sale of Microsoft OS with notebooks in Belgium and other EU countries, and more specifically the failure of Belgian authorities to prevent the distortion of the market for notebook laptop computers.

All major notebook computer suppliers in Belgium, perhaps representing almost 99% of the retail notebook market, offer no option other than to pay for a pre-installed version of Windows. Such companies include Dell, Packard Bell, Photo Hall, MediaMarkt, HP, Sony, Toshiba, Acer, Fujitsu Siemens, and Lenovo.

The forced pre-installing of and payment for Microsoft operating systems on notebooks in Belgium has engendered a distorted market. The companies involved maintain confidential pricing policies as to manufacturer-paid charges for the Windows operating systems. However, there are indications that this could lead to excess charges of EUR 100 for unit purchased by an end consumer.

As a user of an alternative operating system based upon a GNU General Public License, as do some 5 percent of notebook users, I myself now face being charged for a product I do not and will not need.

Although the End User License Agreement (EULA) for the Microsoft Windows XP Professional and Microsoft Windows XP Home Edition refers in vague terms to the possibility of a refund in the event of not installing and not agreeing with the EULA terms, notebook providers in Belgium refuse to offer such refunds and do not have known procedures for so doing.

As a normal customer buying a single notebook, it is not possible in any way to configure purchase options so as NOT to pay for a Windows operating system at any of the following retailers: Dell, Packard Bell, Photo Hall, MediaMarkt, HP, Sony, Toshiba, Acer, Fujitsu Siemens, and Lenovo.

I therefore request that the Commission make a formal investigation into the distortion of notebook computer market in Belgium and elsewhere as well as to force local authorities to ensure that consumers have the right to choose whether or not to buy a Windows operating system when purchasing a notebook in Belgium and elsewhere within the EU.

The EC's Response

Thank you for your email dated I7 June 2006 to the Consumer Officer. This email relates to the possibility of purchasing PCs without a preinstalled Windows operating system.

The Commission is aware of the difficulties encountered by consumers to purchase PCs without an operating system on them or alternatively with another operating system than Windows.

As regards the possibility of purchasing a PC without an operating system, I understand that Microsoft's licensing agreements with PC manufacturers encourage (through the grant of rebates) the pre-installation of operating systems on PCs. However, this does not have to be a Microsoft operating system. The Commission is not aware of any obligation either contractual or financial, obliging the PC OEMs to sell their PCs with Windows operating systems in particular.

Furthermore, it appears that the choice of a PC vendor to offer PC with or without an OS is not so much influenced by the rebate offered by Microsoft than by the existence of effective consumer demand for PCs with operating systems. We suspect that the structure of the market and demand from consumers is the driving force behind the decision by PC vendors to offer Windows preinstalled on the majority of their computers. If this is information is confirmed, the conduct of PC manufacturers would be justified by pure commercial reasons and may not fall under the provisions of EC competition law.

That said we have not yet finalized our review of the market and are grateful that you took time to inform us of the problems you have encountered. Against this background, I would like to take this opportunity to inform you that the Commision intends to examine these questions in greater detail in the future.

Yours sincerely,

Angel TRADACETE COCERA

EUROPEAN COMMISSION

DG Competition

Director Directorate C: Information, Communication and Media

B-1049 Brussels