It says this will not make consumers' lives more difficult, as they would simply be asked to insert an OS DVD when they first power the system.
The institute has submitted a policy report to the European Commission as an attack on Microsoft's dominant position in the OS market. It hopes the EC's success this month with the Court of First Instance upholding anti-trust charges against Microsoft will embolden the Commission to take further steps.
"There is no meaningful competition between operating systems for commodity computers," wrote Alex Singleton, President of the Globalization Institute. "Microsoft's dominant position is not in the public interest. It limits the market and has slowed technical development to the prejudice of consumers."
The institute argues while that PC vendors and component manufacturers must compete on styling and brand reputation, none are the sole choice for consumers. Intel battles with AMD, hard drives come from Seagate, Hitachi and Western Digital, various memory makers scuffle amongst themselves, etc.
"But on the software side, the general customer, who walks into a PC World or PC City, is not able to purchase a commodity PC without automatically paying for Windows," said Singleton. "The result is that consumers who, given the choice, would opt for a cheaper operating system, find themselves automatically buying the market leader."
Windows dominance translates into extra cost for almost every EU business, The institute argues. In addition to the price of purchase, companies also pay hiked support costs to patch vulnerabilities that "have plagued Windows systems".
"In America, misguided supporters of pure laissez-faire try to claim that Microsoft's monopoly is good for consumers." Singleton told El Reg It's a proposition that only a blinded ideologue could support. Laissez-faire, unlike the free market, is an ideology that doesn't work — if you want to see it in action, you just have to look at the disaster that is Somalia."
Singleton said Microsoft's dominance has meant higher prices, less innovation and more computer crashes. "How can someone who supports free and open markets defend that?"
"Some people say operating systems are a natural monopoly because it would be expensive and confusing for people to have to deal with more than one system," Singleton said. "I don't agree. With more competition, open file formats and protocols would become the norm, and important innovations in one system would quickly become standardized across different systems. We see this already to a huge degree with different distributions of Linux."
Last week, Microsoft lost its appeal against European Commission charges of anti-competitive behavior. After the verdict, European Commissioner Neelie Kroes said she hoped to see a lowering of Microsoft's 95 per cent market share. Her spokesman later clarified that she merely meant that once the abuse has been removed and competitors are free to compete, the consequence of that is to expect Microsoft's market share to fall.
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