Euro think tank recommends unbundling Windows from PCs

A pro-business think tank in Europe has recommended unbundling Microsoft's Windows operating system from sales of new PCs in order to give customers more choice when buying a new computer.

A report from the Globalisation Institute in Brussels urges the European Commission to require that PCs and operating systems be sold separately in Europe to break Microsoft's monopoly in the desktop OS market.

"Microsoft's dominant position is not in the public interest. It limits the market and has slowed technical development to the prejudice of consumers," said the report.

The report is gaining attention partly because the Globalisation Institute usually advocates a hands-off approach to business regulation. It researches and develops policy options that are sometimes championed by politicians.

Its report comes one week after Europe's second-highest court turned down Microsoft's appeal of the European Commission's 2004 antitrust ruling against it, which fined Microsoft around $600 million for abusing its OS monopoly.

That investigation focused on how Microsoft bundles its Media Player software with Windows, which the Commission said harmed competitors such as RealNetworks. It also required Microsoft to publish communications protocols so that its rivals can make their server software work better with Windows clients.

The Globalisation Institute said the Commission should take its thinking about Microsoft's OS to its "logical conclusion" and force PC makers to unbundle Windows from PCs as well.

The report does not mention recent moves by vendors such as Dell, and Hewlett-Packard in Australia, to offer Linux as an option with PCs sold online. Globalisation Institute president Alex Singleton called those offers "a token gesture."

"The fact is, when you go into a computer shop, the majority of consumers are not faced with a choice. Just because on the margins you are offered something else, I don't think those choices mean there is real competition."

In addition, the report argued, offering a choice of OS is not a practical option for retail stores, where floor space is limited. Therefore, PCs should be sold separately from the OS.

"We do not believe this would add complexity for consumers. Consumers would simply be asked to insert an operating system DVD when they first turn on a new computer, which would then automatically configure itself," the report says.

Such competition exists in hardware, the report argues, with microprocessors and hard drives available from a choice of vendors. But when consumers walk into a store they generally have only one choice for an OS: Windows.

"The result is that consumers who, given the choice, would opt for a cheaper operating system, find themselves automatically buying the market leader."

The group sent its report to the office of the European Commissioner for Competition, Neelie Kroes, Singleton said. Kroes led the Commission's antitrust case against Microsoft and has called the company's share of the desktop OS market "unacceptable."

Microsoft representatives did not immediately respond to requests for comment on the report.