COMMENTARY: Just a day before he was supposed to appear onstage in Las Vegas, Nevada, for a keynote address at the Microsoft Management Summit (MMS) 2004, Microsoft CEO Steve Ballmer abruptly cancelled those plans.

Instead, he flew to Brussels, Belgium, to enter into intense closed-door negotiations with European Union (EU) Competition Commissioner Mario Monti in a bid to reach a last-minute settlement in the company's antitrust case there. Separately, the EU said yesterday [US time] that it would announce its verdict against Microsoft on 24 March, barring any settlement.

Representatives of Microsoft and the EU had confirmed the talks separately. "Yes, there's been a meeting today," an EU spokesperson said. "Discussions are ongoing. That's all I'll say." A Microsoft spokesperson noted that "discussions are ongoing. We are actively engaged with the Commission."

Sources close to the talks said that EU officials were using an unusual and potentially effective negotiation strategy: Rather than offering to drop requirements, the EU was asking Microsoft to make more concessions in its settlement than the company would be forced to accept in a court ruling.

This strategy stood in sharp contrast to the negotiation techniques the US Department of Justice (DOJ) employed when it essentially handed Microsoft a huge victory during its antitrust settlement, even though the software giant was thoroughly defeated in court and found to be an abusive monopolist.

In one example of the EU's strategy that The Wall Street Journal cited, the EU's draft ruling stipulated that potential changes to Windows applied only to European markets but, for the settlement to be approved, the EU was requiring that Microsoft made the changes worldwide.

Tactics notwithstanding, analysts who were covering the high-stakes European antitrust battle had concluded that Ballmer's arrival in Brussels signalled that the settlement talks were reaching an end. He'll either close the deal now or walk away from the table and force his company to face several more years of often-embarrassing and potentially damaging legal battles.

The biggest EU concern was still Windows Media Player (WMP), which Microsoft had been bundling into the Windows OS since the early 1990s. In recent years, however, WMP had become more capable as consumer needs for digital media have risen dramatically, and now several competitors believe that WMP's integration with the OS gives the company an unfair advantage. The EU wants Microsoft to offer a stripped-down version of Windows that doesn't include the media player.

Also on the plate was server interoperability. The EU charged that Microsoft doesn't offer competitors enough technical information to let them write software applications, server software, and services that worked well with Microsoft server products. By withholding this crucial information, the EU said, Microsoft was in the process of securing another dominant market that would leave competitors unfairly disadvantaged.

Ballmer wasn't the first Fortune 100 CEO to appear before the EU's antitrust officers. In 2001, General Electric (GE) CEO John Welch Jr. unsuccessfully attempted to convince the EU that his company's proposed takeover of Honeywell was in the public interest. The EU ruled that the companies couldn't merge because doing so would create a single company with too much market power.

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