Analysts: Microsoft Has Antitrust Anxiety

Microsoft will not only pull its Save As PDF feature from Office 2007, but will bow to Adobe and let computer makers strip its own rival electronic document format from Windows Vista.

Friday, Microsoft Office developers confirmed that the Save As feature will be dropped from future versions of Office 2007, which recently debuted in Beta 2 format with the export tool intact. Later that day, a Microsoft manager in the Windows development team acknowledged that Microsoft will also give computer manufacturers the option of dropping XPS (XML Paper Specification) from the Vista.

Both moves -- as well as the decision to also toss out a Save As XPS command in Office 2007 -- were forced on Microsoft, the company said, by Adobe's threat of a lawsuit.

"Adobe has been pushing for us to remove XPS from Windows," wrote Microsoft group product manager Andy Simonds in a blog entry. "This is something we can not do. We are always sensitive to competitor complaints when we design Windows and we’ve tried to address any concerns Adobe may have. But, we have to first and foremost design our products for customers, not competitors. "That being said, in order to accommodate Adobe's concerns, we have made it so OEMs making PCs can choose to not include XPS as part of Windows."

In the past, Microsoft has fiercely fought attempts to "unbundle" elements of its operating system. That was the basis of its years-long court case against the U.S. Department of Justice, which unsuccessfully tried to get Internet Explorer removed from Windows, and the ongoing legal battle with the European Union's antitrust division. In the EU case, Microsoft was forced to create new editions of Windows XP minus its Windows Media Player.

Analysts generally saw Microsoft's surrender as driven by antitrust anxiety.

"That seems to be the best explanation of why Adobe would press Microsoft," said Rob Helm, research director at Kirkland, Wash.-based Directions on Microsoft. "It's hard to understand as a business decision. Adobe would benefit from a broader adoption of PDF. It has server-side products [that Microsoft lacks]."

Letting OEMs drop XPS is a red herring, Helm believed; the real battle between Adobe and Microsoft is over PDF. "I'm sure that Adobe doesn’t want PDF to take a back seat to XPS, [but] XPS is very long term. Microsoft felt it had to have a product in the category, but it's not had a lot of luck."

Helm thought that the most likely venue for an Adobe lawsuit would be Europe, not the U.S. "The elements [specified] in the U.S. for a bundling case just aren't there, but Europe is a completely different story.

"That may be why Adobe is being so quiet about it. European antitrust [cases] are a lot less open than in the U.S.," said Helm.

To satisfy Adobe, Microsoft has said it will remove the Save As PDF and Save As XPS entry from Office 2007, but will offer them in a separate free add-on that users can download. However, XPS, which was once code named "Metro" by Microsoft, won't be removed from Windows Vista. Instead, computer manufacturers will be able to leave it out.

If history is any guide, that option won't be used by many OEMS. In Europe, computer makers are able to pre-install the "N" editions of Windows XP, which omit Windows Media Player. At its April appeal of the EU's 2004 antitrust ruling, Microsoft claimed that no PC maker had pre-loaded Windows XP N, and that fewer than 1,800 copies had been sold throughout Europe.

Joe Wilcox, an analyst with JupiterResearch, saw the brouhaha as yet another example of what will likely be a common occurrence as Microsoft steps onto turf once solely owned by its partners.

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