92002E3752

WRITTEN QUESTION E-3752/02

by Kathleen Van Brempt (PSE) to the Commission

(20 December 2002)

Subject: Palladium

In its next version of Windows, Microsoft wants to incorporate a virtual lock called Palladium. Microsoft claims that this will protect PCs against viruses and filter spam. It may also provide a means of preventing the illegal copying of software. Palladium is also supposed to provide PCs with a unique identification code. There is a fear that an identification code of this nature developed by Microsoft will make the running of competitors' software impossible.

1. How will the Commission ensure that Microsoft does not misuse Palladium in order to eliminate competitors? Will Palladium jeopardise the development of free software/open source development?

2. PCs equipped with Palladium will be able to operate only with Palladium-compatible software. It is lawful for a company which itself sells software to make the rules relating thereto? Does not the Commission see it as its role as the authority in charge of competition issues to lay down the requisite rules?

Answer given by Mr Monti on behalf of the Commission

(12 February 2003)

1. The Commission is aware of Microsoft's Palladium initiative. This project is still in its early stages. As such, and in the absence of any formal complaint, the Commission is not investigating Palladium. The Commission is nevertheless fully aware of the potential impact of technologies such as Palladium on a range of areas, including the development of open source software, user control and user rights issues, privacy issues and content provision. The Commission is committed to act within its powers in favour of innovation and is actively engaged in dialogue with all parties expressing views on Palladium.

2. Palladium is not currently incorporated in any Microsoft products on the market, and it is therefore premature for the Commission to make an assessment of its effects. As the authority in charge of competition issues, the Commission is committed to ensuring that conduct in the market is in compliance with the Community's anti-trust rules, such that market outcomes which are beneficial to consumers, competition and innovation are attained.