Should European governments favor open-source software when they hold tenders for public contracts? Economists and policy makers appear to think so but industry giants including Microsoft argue that this would be discriminatory and are considering legal action to prevent this from happening.

A public consultation on a new set of guidelines regarding software interoperability in the public sector in Europe closed this week, sparking submissions from 50 lobby groups and firms from all corners of the software industry.

The draft guidelines, known as the revised European Interoperability Framework (EIF), were drawn up by the European Commission in close consultation with national governments from theEuropean Union's 27 member states, many of which have already drafted their own guidelines based on what has been agreed at the E.U. level.

The revision of the EIF, dubbed EIF V2.0, calls for open standards but stops short of requiring public offices to buy open-source software. National governments, including most recently the Netherlands, go a step further by instructing software purchasers in public offices always to pick open standards and open-source software when possible.

Open source accounts for around 5 percent of public sector software contracts in Europe, said Laurent Lachal, a senior analyst at the research firm Ovum. "In the past there were rules that excluded open-source software vendors from public contracts," he said.

Now governments are increasingly taking the opposite view by favoring open source. Government see it as a way of boosting their indigenous software industry, they don't like being locked into working with one software provider and open-source networks are easier to connect together, both at a national level and at a pan-European level, Lachal said. Open-source software's cheaper price compared to proprietary applications is another often cited reason.

Proprietary software makers laud many of these aims but argue open-source software isn't the only way of achieving them.

"The objective of stimulating the local software industry in Holland is a good one," said Hans Bos, national technical officer for Microsoft in the Netherlands, referring to the Dutch guidelines, which are due to come into force later this year.

However, he added that Microsoft's products also stimulate the local market by providing others with a platform to build on.

"The Dutch government wants to create a level playing field by giving an advantage to open source. We think this is discrimination and it is short sighted: what will they do in the future when a different business model comes along? Why give a leg up to one business model in such a dynamic market," he asked.