Microsoft: more antitrust trouble?
p2pnet.net News Feature:- Microsoft could be heading for more antitrust trouble just days after it has filed an appeal that calls for its European anti-trust decision to be quashed.
An anti-trust investigation has now been launched against it in South Korea. According to the Korean Times, regulators descended on the Seoul offices of Microsoft and will take up residence there for the coming weeks while they gather information relating to the probe.
The specific complaint they are investigating is whether or not Microsoft bundled its instant messenger service with its Windows XP operating system, which of course, it did.
There have been complaints in the past from Korean companies to its Fair Trade Commission, always relating to bundling by the US software giant, including photo management software and the media player.
The same issues lie at the heart of the European decision against Microsoft,which it is now appealing.
It has been an underlying principle of anti-trust legislation from when it was first introduced, that a company may not subsidize a new market area from a business that is a monopoly. From that have come two rules of thumb, that bundling two business offerings together, one that is part of a monopoly service and one that it not, is illegal. The other is that it is also illegal for a monopoly to subsidize a new product area by pricing below cost.
Bundling anything for free with an monopoly PC operating system breaks both rules of thumb in one go.
Microsoft can live with the fine of €497.2 million ($602.6 million on the day of announcement’s currency rate), but not the idea that the European Commission will be breathing down its neck with a squad of investigators that can strike once again at any minute, which the remedy also entailed.
So not only should Microsoft worry about the Korean complaint, originally brought by local company Daum Communications, into its bundling of instant messenger, but it should be just as wary of its new Window Media 10, which it has begun showing in beta, which is blatantly bundling elements of its digital rights platform.
It appears that Microsoft’s approach is to ignore the Commission’s anti-trust decision and await the verdict of the appeal, before it even considers whether or not it should change its approach to business.
That appeal was filed last Monday with the EU Court of First Instance in Luxembourg, and it expressly requests an immediate suspension of the ruling by the European Commission.
If it is successful, it will be the first time in the history of the European Union when such a decision has been made. A finding by the European Commission is usually law until the court can hear the full case, which will, in this case, take at least 5 years, possibly 7.
Microsoft has gone through a series of humiliating climb downs with competitors, paying a sum far greater than the fine to Sun, as if by paying off the complainant it can somehow wipe away the harm that has been done to it.
Ask yourself, if Microsoft is happy to sign a check for almost $2 billion to its most bitter rival to get it off its back, how much would it be happy to put into the presidential campaign coffers if it meant bringing pressure to bear on the European Commission to reverse the decision?
The US Computer and Communications Industry Association wrote in April to Colin Powel, Secretary of State for the US, and to US Trade Representative Robert Zoellick, urging that they take no action in support of the Microsoft case in Europe.
But more worryingly the CCIA said that it was aware of pressure being put on Powell and said that none of its members had voiced a single word of support for Microsoft. Many had spoken in favour of the European Commission decision, some only privately for fear of Microsoft reprisals. It said that ‘our technology industry will be helped, not harmed, by this ruling, and more jobs are likely to be created.’ And went on to say, ‘Microsoft is seeking to build Congressional pressure to urge the Administration to intervene and overturn this fully justified decision, unanimously backed by every government in Europe.’
And adds: ‘In an attempt to continue to defend its widely ridiculed settlement with Microsoft over two years ago, some in the Justice Department have contorted themselves into almost becoming monopoly apologists.’
But let’s be realistic about this. The US government sees Microsoft as one of the jewels in the crown of a virtually bankrupt economy. A crashed Microsoft share price helps no-one in the current US administration. If the US government of the day feels it should bring out the big guns in Europe, there are many things more valuable to Europe
than keeping Microsoft’s nose clean, and the political will could be shifted towards granting the stay of execution.
We’re not sure that the legal mechanics exist for the political leaders in Europe to guide the Court of First Instance, but it is likely that there are ways.
However, the pressing matter of an election that the Bush Administration is unlikely to win, and the fact that the European Court of First Instance has, as yet, given no reaction to the appeal or even the timeframe that it might give one, makes it all up in the air. But if it upholds the European Commission’s decision, then the day after Microsoft
needs to unbundle like crazy, because a host of copycat actions will follow, in Korea and back on home soil.
In the US right now the Justice Department is still yelling that it did the right thing in the Microsoft case, but was it coincidence that this administration came to power and suddenly the judge that had found Microsoft guilty, and who was intent on breaking it up, found himself replaced and the ruling changed?
If the tide turns against that kind of political intervention, then the door will be open to sue Microsoft every time it bundles anything. And that will mean a change of approach at the top of the organization, and the best way to secure that is via a change of personnel.
Peter White – Faultline, UK
June 19th, 2004 at 4:46 am
Let’s begin with Microsoft, and are they guilty of being monopolists?
The answer of course is no, just because they are the most popular computer operating system in the world does not mean the they are the only game in town. Linux comes to mind, as does Oracle and Sun. Don’t you think it’s a bit dictatorial when the Chairman of the EU Anti-Competition board can tell what a company can and cannot include in it’s products.
I Live in Canada and I as a consumer I love the fact that I get a Media player included in my O/S I also love the fact that if I want to I can download Real Player and use it in place of the Microsoft offering.
Microsoft has dominance in the industry because they offer a better product, at a better price, and stands behind their product.
All this anti-trust crap is being brought on by Microsofts competitors, not by disgruntled consumers, who are in the end, the one’s who will suffer.
And now the consequences! who in their right mind would invest in anything to do with the EU? I held stocks of companys operating in the EU, no more, gone gone gone.
Why would I take the chance of losing thousands of dollars on a company that can’t compete or introduce new products because of
the draconian business environment that hangs over the EU.
This ruling by Mr. Monti better not stand, or the EU will take two giant steps backward into the dark ages.
The old adage still stands: ” Lead, Follow, or get out of the way”
Two College buddies built the most succesful company in the world
by listening to their customers, and coming up with solutions to their problems, they did it through hard work, imagination, and the willingness to take the road through uncharted territory.