Microsoft Loses in the EU, but Does It Really Matter?

Opinion: Another day, another smack on the nose for Microsoft, but is Microsoft ever really going to learn to change its business ways?

An old, tested method of teaching a puppy to stop making messes in the house is to give him a swat on the nose with a rolled up newspaper when hes made a mistake. When it comes to Microsoft, though, I dont think even if you wiped its nose in its mess and swatted it on the snout with a rolled up legal judgment that it would ever learn to behave right.

So, yes, Microsoft did get a smack on the nose on Sept. 17 when the European Court of First Instance upheld the findings of the European Commission that Microsoft abused its desktop domination by refusing to make its products interoperable with those of its rivals and by tying Windows Media Player to Windows.

The decision means that the EUs $613 million fine stands. Microsoft must offer to PC manufacturers a version of Windows without Windows Media Player and it has to open up its proprietary Windows API (application programming interface) information to its rivals.

This EU ruling followed a five-year investigation. During the inquiry, EU investigators found that Microsoft had used its "near monopoly" in the desktop operating system market to create an illegal advantage in related software markets such as server interoperability. What a surprise!

Every now and then I run into someone who honestly believes that Microsoft rules the desktop market because it produces the best products. No, once more, a court has decided that Microsoft controls the market because it illegally uses its proprietary technology and dominant position to strangle its competitors in the cradle.

Back in 1999, U.S. District Court Judge Thomas Penfield Jackson in the Department of Justice vs. Microsoft Corp. antitrust trial ruled that Microsoft was a monopoly and that it abused that power. After several months of deliberation, Judge Jackson went with then-Attorney General Janet Reno and the DoJs (Department of Justice) suggested remedy: break up Microsoft into two companies: one for operating systems and the other for applications.

Microsoft managed to drag its appeal process into 2001. With George W. Bush and Attorney General John Ashcroft in charge, the DoJ decided it was no longer necessary to push hard for a breakup. In the end, under a new judge, U.S. District Court Judge Colleen Kollar-Kotelly, Microsoft got away with a slap on the paw.

In that decision too, Microsoft was required to open up its APIs... so long as it didnt touch on Microsofts "anti-piracy systems, anti-virus technologies, license enforcement mechanisms, authentication/authorization security, or third party intellectual property protection mechanisms of any Microsoft product." To quote Peter Coffee, then an eWEEK editor, "Find me an API that has no connection with any of these functions, especially given the current trend toward pervasive technical measures for digital rights management. Go ahead, Ill wait."


Click here to read more about Microsofts EU defeat.

The end result of the settlement? If you believe the DoJ, it was great. "The final judgments have been successful in protecting the development and distribution of middleware products and in preventing Microsoft from continuing the type of exclusionary behavior that led to the original lawsuit," said Assistant Attorney General Thomas O. Barnett.

Stephen Houck, the attorney representing Californias interests in the 2002 landmark antitrust settlement, showing that California can smell the stink of a bad dogs accident, said Microsoft still dominates the operating systems and Web browser markets. Why does he think that? Could it have something to do with Microsoft having 92.6 percent of the desktop market and 61.7 percent of the Web browser market?

In the end, Microsoft got away with making a mess in the United States. I dont see any reason to think that this mutt of a company is going to learn to do any better in Europe.

First, this is not the end of the story. Microsoft now has two months to appeal at the European Court of Justice. They will, of course, appeal. Tune in next year, or perhaps the year after that, to see what the court decides. In the meantime, its business as usual for Microsoft in Europe.

Next, lets look at the fine. $613 million may sound like a lot of money to you. But Microsoft? Microsofts gross profit in Fiscal Year 2006 was $40.43 billion. $613 million is less than a weeks gross profit. Not gross income, gross profit. Thats gotta hurt.

Microsoft is also required to make available a version of Windows that doesnt include Windows Media Player to European PC makers and retailers. The boys from Redmond already did that. Its called Windows XP N and it was released in January 2005. Similar Media Player-less versions were made available for Vista. Guess what? The "N" versions cost the same as the ones that include Windows Media Player. Would you be surprised to know that no one offers computers with Windows N? Now thats really harsh on Microsoft, isnt it?

Last, but perhaps the only part that might be meaningful, Microsoft will have to disclose server protocol information to its competitors. OK, so whos Microsoft competition in servers? The Unix vendors? Sun just agreed to sell Windows Server 2003. That leaves Linux, more particularly Linux with Samba, as Microsofts own major competitor on x86 servers. But, guess what? Its still not settled that Microsoft has to share its protocol information with open-source developers.

I wish, I really do wish, that this decision would make a difference in how Microsoft does its business. But it wont. Yelling at the big dog that hes a bad dog isnt going to stop him from pooping on the carpet, and the European Court of First Instance shouting at Microsoft wont stop it from breaking laws.

Bad dog!


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