In an attempt to head off a potential antitrust ruling and hefty fine from the European Commission, Microsoft has announced it will remove its web browser Internet Explorer from its Windows 7 OS software in Europe following long-standing complaints from rival browsers. In a memo sent to PC manufacturers, seen by CNET, MS says: “To ensure that Microsoft is in compliance with European law, Microsoft will be releasing a separate version of Windows 7 for distribution in Europe that will not include Windows Internet Explorer.” It will be up to manufacturers to install IE8—currently being advertised on US TV—if they want when Windows 7 launches on October 22.

As the software giant’s VP and deputy general counsel Dave Heiner puts it on the company’s blog: “Obviously, this is a big step for Microsoft (NSDQ: MSFT). But we’re committed to launching Windows 7 on time in Europe, so we need to address the legal realities in Europe, including the risk of large fines.” Competition commissioner Neelie Kroes warned in January that the system could be incompatible with EU law and that “the tying of IE with Windows… distorts competition on the merits between competing web browsers.”

While it still sees nothing wrong with including IE in Windows—after all, nobody has to use it—MS is simply playing safe and remembers well the €497 million fine the EC imposed in 2007 after a long-running dispute over tying its Windows Media Player into Windows, and the further €899 million fine for not following the EC’s subsequent rulings.

Update: The commission issued a response, “noting with interest” Microsoft’s pledge - and suggesting selling an IE8-less Windows at retail makes not a blind bit of difference: “Consumers should be offered a choice of browser, not that Windows should be supplied without a browser at all. ... Instead, Microsoft has apparently decided to supply retail consumers with a version of Windows without a web browser at all. Rather than more choice, Microsoft seems to have chosen to provide less.” Giving OEMs the choice to install their own browser, however, “may potentially be more positive”.

Regardless, the commission is still due to rule and the case on which it’s deliberating concerns “Microsoft’s conduct from 1996 to date” (ie. IE-tied Windows 95, Xp and Vista) - if the result goes against MS, the EC “would have to consider whether this proposal would in itself be sufficient to create genuine consumer choice on the web browser market” and would “take into account the long standing nature of Microsoft’s conduct”. In other words, don’t bet that today’s commitment will get Microsoft off the hook.

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