Google: Microsoft's Windows Vista Suppresses Competition

SAN FRANCISCO – Internet search leader Google Inc. (GOOG) is trying to convince federal and state authorities that Microsoft Corp.'s (MSFT) Vista operating system is stifling competition as the high-tech heavyweights wrestle for the allegiance of personal computer users.

In a 49-page document filed April 18 with the U.S. Justice Department and state attorneys general, Google alleged that the latest version of Microsoft's Windows operating system impairs the performance of "desktop search" programs that find data stored on a computer's hard drive.

The Vista operating system, which became widely available in January, includes a desktop search function that competes with a free program Google introduced in 2004. Several other companies also offer desktop search applications.

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Besides bogging down competing programs, Google alleged Microsoft had made it too complicated to turn off the desktop search feature built into Vista.

With its allegations, Google hopes to show that Microsoft isn't complying with a 2002 settlement of an antitrust case that concluded the world's largest software maker had leveraged the Windows operating system to throttle competition.

The consent decree requires Redmond, Wash.-based Microsoft to ensure its rivals can build products that run smoothly on Windows — something that Google says isn't happening.

"The search boxes built throughout Vista are hard-wired to Microsoft's own desktop search product, with no way for users to choose an alternate provider," Google spokesman Ricardo Reyes said in a statement issued Monday.

In its own statement, Microsoft said it already has made more than a dozen changes to address regulators' concerns about Vista and pledged to address any other legitimate problems.

"While we don't believe there are any compliance concerns with desktop search, we've also told officials we are committed to going the extra mile to resolve this issue," Microsoft spokesman Jack Evans said.

Justice Department spokesman Eric Ablin declined to comment Monday, citing confidentiality concerns.

Although he wouldn't discuss Google's allegations, Connecticut Attorney General Richard Blumenthal confirmed that several states are taking a hard look at whether Vista is affecting the effectiveness of programs that aren't made by Microsoft.

"We really have reached a turning point in the process and expect to make a decision on how to proceed by the end of the week," Blumenthal said in a Monday interview.

Describing the Vista complaints as "troublesome," California Attorney General Jerry Brown said he has been in touch with the Justice Department, other state attorneys general and technology industry representatives in an effort to resolve the issue.

"Our goal is to provide consumers using the Vista operating system easier access to competing features," Brown said in a statement.

In a story Sunday, The New York Times reported that the state attorneys general are more inclined to press Microsoft to revamp Vista than the Justice Department.

A court hearing to review Microsoft's adherence with the consent decree is scheduled June 26.

Google's complaint is just latest example of its escalating battle with Microsoft — a duel that figures to shape the future direction of personal computing.

With its search engine already established as the Web's most popular gateway, Google has been offering an array of additional services that could become the building blocks for a Web-based computing platform that lessens the need for Microsoft's products.

Besides e-mail and instant messaging, Google also is distributing word processing and spreadsheet programs aimed at the Office suite of software that has long been one of Microsoft's biggest cash cows.

Google has been able to offer most of its services free because it makes so much money from the ads that it serves up alongside its search results and other content published by the thousands of Web sites that belong to Google's network.

Hoping to siphon away some of that revenue, Microsoft has invested heavily in its own search engine, which still ranks a distant third behind Google and Yahoo Inc. (YHOO).

Microsoft engineered Vista so its desktop search and Internet search engine would operate independently in an effort to avoid legal problems, said Brad Smith, the company's general counsel.

"If we were creating a feature in Windows and somehow requiring people to jump from our feature to our Internet search, then I could at least understand an antitrust argument being raised," Smith said.

Google Chairman Eric Schmidt has been a longtime critic of Microsoft's business tactics. After raising antitrust concerns about Microsoft in his previous jobs at Sun Microsystems Inc. (SUNW) and Novell Inc. (NOVL ), Schmidt again has been on the attack as he steers Google.

Last year, the Mountain View-based company reached out to the Justice Department to raise alarms about how the latest version of Microsoft's Web browser threatened to make it more difficult for computer users to install the toolbars of competing search engines.

Although regulators decided not to intervene, Microsoft subsequently modified the way Internet Explorer handled the selection of search toolbars.

Before putting its most recent misgivings on paper, Google began discussing the desktop search issue with authorities last year.

Those talks were apparently touched upon during a hearing in March when the Justice Department said it was investigating a claim that Microsoft had violated its antitrust settlement.

Without identifying the complaining party, the Justice Department said the grievances were related to "middleware," or software that links different computer programs.

Google filed its written complaint just a few days after Microsoft publicly urged antitrust regulators to scrutinize Google's planned $3.1 billion acquisition of online ad service DoubleClick Inc.

Microsoft contends the deal will give Google too much power over the rapidly growing online ad market.

The Federal Trade Commission has opened a formal inquiry into the matter.