Microsoft
Battles EC On IP
In
what must be a major management distraction, the European Commission
has finally decided that its antitrust penalties against Microsoft
will be a fine of $613 million dollars (easily affordable by the
highly profitable software company, with its $50 billion in cash)
and a not-so-easy to take decision that Microsoft must offer two
versions of Windows in Europe, one with Media Player and one
without. The EC has
also ordered that Microsoft must provide better interoperability
information to its competitors, information which companies like
rival Sun Microsystems has long claimed it needs to compete.
Microsoft
immediately announced it would appeal.
The U.S. government is apparently on its side, unhappy that
the EC has exceeded the U.S. rulings against Microsoft, in spite of
U.S. government recommendations to the contrary.
We’d
note that there are so many issues here that figuring out what the
real outcome might be – in the marketplace – is hard to predict.
Here are some issues to consider.
(1)
European consumers are unlikely to want a crippled version of Windows
that can’t function with web sites or software programs that
assume the presence of the Windows Media Player.
If both a with Media Player and without Media Player version
of Windows is offered in Europe at the same price, we predict that
the “without” version will simply sit on the shelves, another
example of the foolishness of government intervention into markets.
(2)
Consumers generally download competitive media players (typically Real
Player or Apple’s QuickTime) without difficulty.
They can do so on their own or be prompted to accept one by
clicking on a site or application that employs that player. Most people we know end up with all three on their computers.
(3)
A real concern is whether Microsoft, permitted by the EC to charge
license fees for its interface information, chooses to do so.
This would actually make things worse for the Open Source
market, where the ability to absorb such fees and pass them along by
increases to user pricing is problematic.
(4)
Microsoft, of course, is livid at the thought that someone else is going
to be telling it what it may include in a product bundle.
That, in the software industry, is sacred ground.
Whether you want to take the point of view that Microsoft is
defending the consumers’ interests or whether you, more cynically,
want to assume that Microsoft is defending its monopoly position in
a lucrative market, there is no reason for Microsoft to want to cede
such control. Do you
remember when everything was separate?
Spelling correctors? Browsers?
Desktop publishing (much of which is accomplished in a word
processor today). These
are really PRODUCT decisions that should be shaped by technology, by
customer demand, and by pricing considerations, not by government
policy.
In
any event, none of this will decided anytime soon.
Stay tuned for the second (and further) acts.
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