Does Media Player Ruling Matter Much to Microsoft?

 
 
By David Coursey  |  Posted 2004-12-22
 
 
 
The first thing to be said about the European Unions anti-Microsoft decision is that it hardly matters in the great scheme of things. Very little, if anything, is going to noticeably change as a result. And Microsoft appears to have been fully prepared for the adverse ruling.

Microsoft doesnt generally outright lie to people, so when the company says its ready to fully—and rapidly—comply with the ruling, I believe it. This is another example of how Microsoft is trying to get its legal problems solved as quickly as possible.

Yes, its new having some European judge named "Bo" ordering giants of American industry around, but thats the aspect of this case that could actually matter most in the coming years. Suppose Judge Bo Vesterdorf had been ruling in a case that actually mattered?

Read more here about the EU ruling that denied Microsoft a reprieve from antitrust penalties.

Still, that doesnt change what were confronted with today. And heres a quick synopsis of why the ruling doesnt matter but how it portends the globalized future for Microsoft and other global enterprises.

Heres why the ruling doesnt matter:

Microsofts unbundled Windows XP, minus Media Player, isnt likely to ship on any significant number of machines. Customers want Media Player, and hardware vendors will respond to that. If this ruling was supposed to help RealNetworks become more competitive, it should have required Microsoft to include Reals player with Windows XP. Either way, its not like people who want or need a Real player have a hard time finding one.

Further, this ruling is valid only in the EU, so American and other customers would never see the unbundled Windows in any case.

Sharing some additional protocols matters only if Microsoft doesnt manage to lessen their importance or implement some new protocols. In general, I think its in Microsofts interest to make its APIs widely available, though the company always seems to be in trouble on this front.

Heres why the ruling does matter:

It reflects the new world in which there are non-American opinions that matter and must be taken into account. I am not ready to say that EU courts will have more influence over Microsoft (and other global companies) than American courts, but its clear that the EUs legal presence will be felt going forward.

The EU may become the venue of choice for competitors seeking to challenge Microsoft on any of a variety of issues. European laws are generally considered more favorable to maintaining competition, and relief may come much more quickly than in American courts. There is something to be said for a system that goes ahead with punishment even before all appeals have been heard.

It would be interesting to see an analysis of how the outcome would have been different if the Department of Justices case against Microsoft could have been tried in the EU courts. Or merely if Microsoft had done business while taking such a prospect into account. The kinder-and-gentler Microsoft were seeing as of late may be a reflection of this and of the increased importance of non-American legal systems.

Is Microsoft down for the count? Click here for industry watchers takes.

And finally, some interesting points:

The $497 million euro fine has been widely reported to translate into $613 million U.S. dollars. But with the dollars recent slide, the cost is up to $647 million U.S. Not that Microsoft will notice.

How long do you think it will be before Microsoft finds itself in a Chinese court accused of unfairly competing in that emerging economy? Actually, I think India may be more likely, given the emergence there of international players and the countrys more organized legal system. There is also the prospect that Microsoft will be targeted as a way of punishing an American company and/or protecting local enterprise.

Microsoft seems to be working hard to integrate itself into the Chinese economy, in particular. Significant Microsoft R&D is going on there, and while I dont know the full MS China strategy, Redmond is making significant investment in a potentially huge market.

Finally, for however long the EU case continues and whatever the final outcome may be, this is the first time that Microsoft—because its now being penalized and might hope for some relief—actually has an interest in speeding up the legal process. Previously, its always been in Redmonds interest to slow things down as much as possible.

So, even if this particular ruling doesnt mean much, Judge Bo knows—or should—that the EU and other legal systems are becoming almost as important to Microsoft as the American one. And thats a pretty big change.

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