REGULATORS THREATEN EUROPE ONLINE SERVICE

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Theory and practice are at another crossroads, this time in Europe's emerging online services industry.

The European Commission is launching an investigation into Europe Online, which is due to start in English, German and French next year.

In a statement from Karel van Miert, European commissioner for competition, the EC said it wants to prevent companies from creating "anti-competitive situations, which would stifle the development of online services and the information society by ruling out viable competition before an effective market has had a chance to grow."

Europe Online will be run by a consortium of media companies, including Pearson from the U.K., Burda and Axel Springer from Germany and France-based Matra-Hachette.

Europe Online is not the only online system under scrutiny by the EC. America Online (whose partner is German media giant Bertelsmann) is also undergoing an inquiry because of its German partner's size and influence in Europe. And Microsoft Network is being monitored to see how that service develops in Europe.

The only services that have avoided the attention of EC legislators in Brussels are Prodigy and CompuServe, believed to be immune because they either have no European partners or have partners with lesser influence.

In theory, the EC is in favor of emerging new media like online services. Last February Brussels played host to a G7 Conference on the new-media revolution, and several EC dignitaries praised the emergence of what has now been christened the "information society."

Shortly after the conference, the EC gave Europe Online a grant of $700,000 intended to help content providers convert their material to the Europe Online format.

So the EC's planned investigations came as a surprise to the venture's partners.

"We welcome the inquiry," a Europe Online spokeswoman said. "And we are confident it is not going to affect our launch date next year."

But behind the bravado are real fears at Europe Online that the EC will stifle the new service.

After the announcement about the investigation, word got out that two of Europe Online's core members, Pearson and Matra Hachette, were looking to divest themselves of their financial stakes in the venture. Europe Online won't comment on the finance side of the business.

Helmut Fluhrer, director of new media for Burda, said he doesn't expect anything to come of the EC's investigation because Europe Online can't be accused of dominating a market that doesn't yet exist.

"Where do we have a monopoly? In our laboratories?" he asked.

Two new investors will be announced within weeks, the spokeswoman said, adding that they will be "good, strong European companies who are not publishers."

That should appease the Eurocrats-in theory

Laurel Wentz contributed to this story.

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