The long-running dispute between Microsoft and the European Commission reached something of a conclusion in September 2007, though there was widespread disagreement over whether this represented a triumph for competition regulation or a nadir for technological innovation. Were, indeed, there any winners?
In upholding the 2004 decision which found Microsoft had broken competition laws, the European Court of First Instance (CFI) ruling vindicates the EC’s decision to pursue the case. But has anyone in Europe benefited? Moreover, given the breakneck pace of change in the world of technology, can a near-decade long bureaucratic process ever really benefit users, or should market forces be allowed to exert their own influence?
When EC competition wonks first investigated potential monopoly abuse by Microsoft, the software maker was the dominant company in technology. Supporters of the anti-trust action point to Microsoft’s rising share of the operating system market over the years as evidence that competitors were being unfairly disadvantaged.
But the landscape has changed. New competitors such as Google have emerged; virtualisation is rewriting the operating system rule book; Microsoft has inked co-operation pacts with rivals Novell and Sun Microsystems. EC regulators may like to take credit for this last change, but there is as much evidence to suggest changing customer expectations have encouraged Microsoft to open up as there is evidence that the big-stick approach has worked.
And for all the platitudes Microsoft’s general counsel Brad Smith espoused at his post-result press conference about the lessons the company had taken on board, the overwhelming message seemed to be: ‘We have moved on, the case has become an irrelevance’. Microsoft still has time to submit a further appeal and it may decide the fine imposed is too steep.
Nevertheless, Microsoft has warned other vendors they could be next. The EC may now feel emboldened: already it is in the early stages of examining competition in the mobile phone and micro processor markets. Do users need the EC’s protection here too, or is it another misguided attempt to change the course of an industry that has already left it behind?
The experts’ response…
Think tanker, Simon Tilford, of the Centre for European Reform insists users benefit from rigorously applied competition laws.
Attempts to portray the EC’s ruling as anti-competitive and as a threat to innovation do not really stack up. This case is not, as Microsoft and its supporters contend, about punishing a company for being successful by compromising its intellectual property. The market for IT is not so different from other markets that the suspension of antitrust law is justified. Rather, the case is about making it possible to compete with Microsoft in its core areas of business.
Ovum analyst, David Mitchell, says that the case has been a waste of both time and tax-payers’ money.
The European taxpayer has paid to force Microsoft to produce a product that very few people wanted and has paid to improve the quality of Microsoft’s development practices. As one of those European taxpayers I am not sure that this has been money well spent. The case simply does not address the structural market issues that it first saw, either because the remedies were inappropriate, the analysis didn’t reflect the actual market operation, or a range of other possibilities.
