EU

The EU Doth Protest Too Much


Yesterday, the European Union antitrust chief went on the

record denying that the EU was seeking a vendetta against Microsoft in its

ongoing battle with the company over alleged anticompetitive practices. I say

that the EU isn't nearly as interested in innovation and competitive choice in

Europe as it is of picking the pocket of a big bad American company.

The EU's behavior clearly indicates it's more interested in

fines and money than it is in truly fixing the 'problem' of Microsoft

dominating the software industry. The EU had settled with Microsoft over the

issue of opening up Windows APIs and bundling Windows Media Player in Windows

XP. On two occasions since the 2004 agreement, the EU has fined Microsoft

nearly a total of $1 billion. Since then the company and the commission have gone back and

forth about how Microsoft is supposed to 'behave' in Europe – to the point

where Windows Vista may be delayed in Europe to satisfy the government.

Now, I'm not saying for one second that Microsoft is an

innocent victim here. From the days when it redesigned DOS 2.1 with the motto

"DOS isn't done until Lotus won't run", Microsoft has a long storied

history of playing hard ball with its competition. Consider some ofthe

evidence:

  1. Netscape's browser being driven off the road of the information superhighway by an integrated Internet Explorer.
  2. OS/2 crashing and burning due to admittedly illegal bundling

    agreements with OEMs preventing IBM from getting OS/2 preloaded on new

    computers.
  3. The blatant rip-off of drive compression technology from Stacker when it wouldn't sign a licensing agreement with Microsoft for DOS 6.0.
  4. Modifying underlying Windows 95 code to display errors when DR-DOS was installed on a workstation.
  5. Creating undocumented system calls in its operating systems that its own applications could use to run more smoothly than competitors.

Clearly, Microsoft plays rough and will cut corners when it

deems necessary to get a competitive advantage. Put Bill Gates in a ten-gallon

hat, and he'd be the software equivalent of J.R. Ewing of Dallas fame.



The issue with the EU however isn't so much what Microsoft

has done wrong. It's what to do about it. The EU claims that sanctions in the

form of a billion dollars worth of fines over two years can help change the

competitive mind of a monopolist. Nevermind the fact that the fines leveled in

two years can be recovered by Microsoft in about two weeks. It's nothing more

than another cost of doing business at that rate. (Interestingly enough, the EU thinks that sanctions can work against

a monopolist seeking profit, but not a nation seeking nuclear weapons. But I digress...)



A non-technological analogy can be found in the

National Tobacco Settlement here in the US. In 1998, the tobacco industry agreed

to pay over $200 billion dollars over 25 years to states to help them 'recover'

the money they lost from the health care costs incurred by states as a result

of cigarettes. The states claimed they were interested in the public's health.

They claimed they wanted to help prevent smoking by hitting tobacco companies

in the wallet. Many states wound up spending the money on things other than

health care and smoking cessation programs. They proved that they were more

interested in the money they could get out of the tobacco companies rather than the true problem which

was smoking. They could use the cover of Big Evil Tobacco and the evils of

smoking to feather their treasuries.



The exact same thing is happening here. The EU (and now

other countries like South Korea) are looking at Big Evil Microsoft and its

questionable business practices and see a goldmine. They can self-righteously

attack a foreign company all in the name of innovation and smaller weaker

competition, while at the same time doing nothing to help the true 'victims'.

With a touch of demagoguery, they laugh all the way to the bank.



The proof? The EU won't give Microsoft clear guidelines

about what it can and can't do in Vista. Instead, it's waiting to leap out and

play gotcha after the fact. The fines aren't used by the EU to help offended

competitors. Real Networks may be used as cover, but they aren't seeing a dime

of the results. Neither is anyone else. And no 'innovation' has come from the

fines, except maybe from lawyers who are fighting the battles.



Government 'action' such as this won't solve the 'problem' of

Microsoft's domination. Smoking has decreased over time as a result of the

choices people have made, not as a result of money being siphoned to the

government. Likewise, Microsoft won't change its practices nor will its

domination end until consumers make different choices. 2007 will be an

important year for Microsoft with the shipment of Vista and Office 2007. And

for the first time, there will be serious competition in the form of Linux, Mac

OS X, and OpenOffice just to name a few.



The EU Commissioner said "Far from pursuing a vendetta

against Microsoft, the Commission's actions are guided by the desire to create

the most innovation-friendly business climate in Europe to the ultimate benefit

of European consumers." How again do European consumers benefit from

fines? By the higher prices caused by delays and the cost of the fines being

passed along to the consumer? You create an 'innovation-friendly business

climate' by attacking one business, but only reaping the rewards yourself and

not helping those who you're saying are being harmed? Changing the rules midstream, or not clearly defining the rules to begin with. and then sanctioning the offender?



If the EU was serious about the 'problem',

they'd place stiffer penalties on the company that would do some real damage or

even seek to break them up. Maybe they'd do like Massachusetts and get

Microsoft's attention by setting purchasing rules (in the form of OpenDoc

format support) which forced people to make software choices other than

Microsoft. At the very least they would issue some clear guidelines about the features in Vista and other Microsoft business practices that they don't like so Microsoft can do something proactively about it.

But they're not serious. They're not truly interested in competition

nor innovation. All they're interested in is an easy way to make a buck – or a

euro. If it comes at the expense of a big American company, so much the better. That kind of sounds like a vendetta to me.

18 comments
seanferd
seanferd

It is just a sorry state of affairs that guidelines must be had for every little patently wrong behaviour some companies can come up with. Should all corporate-related law be re-written so that anything not expressly allowed is forbidden? Probably not a good idea. So that just leaves us with the option for people or corporations to act reasonably, responsibly, and fairly. (Yeah, right.)

Tony Hopkinson
Tony Hopkinson

As a solution it's far from ideal. But MS's domination of the market, has left us damn foreigners with little other recourse. The idea of a bunch of political types setting software gudlelines, is horrifying. The ideal would be to take the money from MS gained soley through the underhanded business practices you mentioned, and using it to subsidise some competition to this big American company. I suspect there would be some very bad fall out from that though. :p The US's reaction to damn foreigners, gaining a business advantage over them is well established in history after all.

Ed Woychowsky
Ed Woychowsky

If you take all the money from Microsoft gained soley through the underhanded business practices Microsoft will only have about twenty-three cents (US) gross revenue for all of 2007. :) Actually, a better solution would be to split Microsoft into separate companies, as was done with AT&T. It would level the play field for other companies.

gwcarter
gwcarter

While I do strongly agree that some of the things MS has done have been really stinky, I must object to the idea that breaking them up would be a good idea. If that were to happen, then there would be several Microsofts to contend with instead of just one. The breakup idea surfaced in the 60s and 70s concerning IBM, and was not implemented for the reason I mention above. Even though MS has supposedly abandoned those practices, I recently was told by Dell that they would not sell their new Vostro line with XP instead of Vista. This harks back to the days when hardware vendors had to pay MS a license fee for every box they sold, not just those with Windows. As confirmation, look at what happened when AT&T was broken up. Now we have several AT&Ts. Even the name was snapped up by Southwestern Bell as their new corporate name. If you think that Ma Bell is gone, just try doing business with Qwest, one of the fragments of the former AT&T. I see only two possible remedies: either subject the executives signing the contracts to criminal prosecution, or, better, market a better product at a better price.

Tony Hopkinson
Tony Hopkinson

products at better prices already exist. Even if you don't, even if you come from the planer Zarg with an aready made super os with a massive front and back office suite, that will run on any hardware. Some one will say, what about the training costs? :p Before you afford to make something, you need a market, and as you say the one we have smells badly of MS. The only reason Linux is still a competitor is it can't be bought. I'm not sure about busting up MS either. Their software is so monolithic, they would have to copoperate to the extent that they might as well be one company anyay.

dawgit
dawgit

While it might seem trivial to you commenters sitting nice and smug in the US, it is not such a trivial matter here. There are clear guide lines already well established. They apply to all wishing to do business in the EU. Other companies have been brought to task as well, so it's not just Microsoft. But for some reason, beyond reason Microsoft tries to circumvent the rules. The real question here is why would a responsible company play games with regulating agencies and major markets if in fact they were a responsible company? -d

homesjc
homesjc

Popular histories suggest that the USA helped its self to allot of IP from the British Empire with out too much acknowledgement. It would be an interesting retribution if penalties for large misbehaving dominate corporations include effectively removing any IP protection from their products. It may be very subtle, just allow one court for disputes, in a geographically impossible place, which is open for say 4 days a year. Yet the WTO could be told, yes we are respecting treaties, you can take action if aggrieved. Antagonism builds up with abuse, and imperial attitudes are an abuse of relationships. John of Aust.

dawgit
dawgit

I wouldn't guess the chances of that happening though. -d

Tig2
Tig2

Didn't you once say that many companies are looking very hard at Linux as an alternative? I know one guy in another thread mentioned that since Vista, he's doing a lot of Mac business with Windows XP in a VM. I believe that person is in Australia. It seems to me that I have heard a number of our European peers mention that their companies are actively looking at alternatives. Perhaps that is for the best as long as their business needs are met.

dawgit
dawgit

...Otherwise it starts getting real complated. When you consider it's not only the base OS we're talking about here. When you think of what is built on top of those OS's it gets down right impossible to discount one over the other. (World wide CAD Data exchanging, Fiancial Data, Logistics, -all multi OS) I believe that the major concensous is that there are many OS's that will be around together for a long time. Hence, the need for them to work together. (nicely) IMHO, of course :D -d

dawgit
dawgit

Hi. Totally correct, especially in the infrastrure sectors. (Think servers and Data centers.) Linux always was big here so it's not like a fad or anything new. I think there was always a tendency to have a 'Home Grown' Base of OS software all along. SuSE was a German Co. and very much in use long befor the take over. France also has this mentality with their own brand of Linux. It is a very healthy market here. And the regulating agencies are trying to keep it that way. (they have a lot of mainsteam support in that too) I think there is always a healthy feeling of insecurity when the Software Sourse is outside of ones country or sphere of political and legal influence. I couldn't imagine how people in the US would act if MS were a French Co., instead of the other way around. -d

jmcgachey
jmcgachey

If I were Bill Gates, I'd just stop selling to EU countries.

seanferd
seanferd

will Bill stop selling to all of us?

dawgit
dawgit

It just don't work that way in the Real World. -d

Tony Hopkinson
Tony Hopkinson

you wouldn't be Bill Gates then would you? Have you any idea, how much business you are talking about giving up?

jmcgachey
jmcgachey

Considerable...I agree. I'm just saying that if it were me, that's the course I'd take. At this point it like giving in to blackmail.

Tony Hopkinson
Tony Hopkinson

they already are, Bill's just helping us maintain a polite fiction for our pride. Ubuntu and Open Office here we come.....

Ed Woychowsky
Ed Woychowsky

You revoke all Microsoft software licenses in the EU and restrict users to just the Web browser for an hour at a time. Then you issue a press statement saying, "All your base are ours."

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