Yesterday, the European Union antitrust chief went on the
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
- Netscape’s browser being driven off the road of the
information superhighway by an integrated Internet Explorer.
- OS/2 crashing and burning due to admittedly illegal bundling
agreements with OEMs preventing IBM from getting OS/2 preloaded on new
- The blatant rip-off of drive compression technology from
Stacker when it wouldn’t sign a licensing agreement with Microsoft for DOS 6.0.
- Modifying underlying Windows 95 code to display errors when
DR-DOS was installed on a workstation.
- 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.