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Software giant Microsoft Corp. agreed Wednesday to relinquish control of set-top box technology used by United Pan-Europe Communications NV of the Netherlands and NTL Inc. of Britain, two broadband cable operators in which it has an interest. Microsoft said it would modify cooperation agreements with the companies, which should make way for competing providers of set-top box technology. The announcement concluded an informal investigation conducted by the European Commission, the European Union’s executive agency and competition watchdog. The investigation was sparked by last year’s probe into Microsoft’s bid to acquire a 29.9 percent stake in Telewest Communications PLC, the UK’s second-largest cable operator after NTL. But following EU objections to that deal, Redmond, Wash.-based Microsoft agreed to reduce its stake to a 23.7 percent interest and cede any management control. Armed with a store of information about the sector, the commission decided to pursue an investigation into Microsoft’s investments in other cable companies. In Europe, the software company has a $300 million stake of around three percent in NTL, a $500 million, 5.25 percent stake in UPC, and a 2.5 percent stake in TV Cabo of Portugal. The commission did not find any conditions in Microsoft’s holding in TV Cabo to be restrictive. But the software maker’s agreements with NTL and UPC were found to run afoul of EU competition law. As part of its investments into these two cable companies, Microsoft is able to control which set-top boxes are purchased via a Technology Board established in each company. The Technology Board, which previously made binding purchasing recommendations, will be abolished altogether at NTL, while the board at UPC will be opened to allow competing companies to supply their set-top boxes. This should make way for companies like OpenTV Corp., Liberate Corp., and [email protected] Corp., which provide set-top box technology rivaling that of Microsoft’s. While the commission said it was pleased about the outcome of this investigation, Microsoft remains under scrutiny by EU regulators. The commission has said that it has several other investigations of the company pending, some of which remain confidential. One pending non-confidential investigation concerns whether Microsoft is abusing its dominant position with its Windows operating system and whether the company is trying to leverage into the server software market. A separate investigation, on essentially the same charge, focuses on Microsoft’s Windows 2000 product. Regulators expect to combine the two investigations. Copyright (c)2001 TDD, LLC. All rights reserved.

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