EU investigation wipes $12bn off Microsoft share price

Microsoft shares dropped nearly $12bn yesterday on news that the European Union is to investigate its new operating system, Windows 2000.

Mario Monti, competition commissioner at the EU, said in a statement: "I have given the green light to an investigation into certain new features of Microsoft's operating system marketed under the name Windows 2000."

The EU was contacted by end users, SMEs in the IT sector, and competitor companies who feared that parts of Windows 2000 will allow it to gain unfair leverage into server operating systems and ultimately ecommerce.

Gary Cooper, research manager at the Butler Group, said: "It seems strange that after all the problems Microsoft has had with the Department of Justice in the US, this has come from Europe. Knowing Microsoft they will take them head on."

In a written response to the investigation, the software giant said: "[Microsoft] will co-operate fully with the Commission's request for information, and that the investigation in no way will interfere with the commercial availability of Windows 2000... Microsoft also confirmed that it does not bundle the distribution of the client and server versions of its Windows 2000 products together."

The statement added: "Microsoft noted that the Commission request follows a complaint filed last year at the Commission by Sun Microsystems."

The news follows industry speculation that the appointment of Bernard Vergnes in 1997 to chairman of Microsoft EMEA, was in anticipation of any legal investigations by the European Commission.