Clogging the EC antitrust bottleneck

When I last spoke on the subject of Adobe's complaints about XPS in Vista, many noted in Talkbacks and other blogs that Adobe hadn't officially done anything yet. Some claimed the story was all part of a Microsoft attempt to demonize a competitor by spreading FUD about the intentions of saintly Adobe (okay, the "saintly" adjective was my own addition).

Well, Microsoft apparently isn't completely crazy, and what they suspected would happen has, in fact, happened. Adobe has now lodged an official complaint with the European Commission (EC). They've already managed to blackmail Microsoft into removing PDF reading and writing plugins from Office 2007 (though they are available as free downloads), something for which consumers were clearly clamoring (tongue placed firmly in cheek), and which now begs the question, was "satisfying" Adobe on the PDF issue "worth it?" Now, as part of their official EC complaint, they are trying to ban Microsoft from shipping in Vista readers and writers for their new XPS electronic document format.

The late timing of these filings has a pretty obvious purpose. They were clearly designed to a) strong arm Microsoft into just giving in so as to avoid the risk of Vista rollout delays (ironic that Microsoft's competitors are the ones angling to delay an already late operating system) or b) delay Vista outright.

Equally clear, Adobe isn't demanding that the ability to understand the format be completely removed, as the entire Vista printing pipeline is now XPS-based. What they object to, apparently, is the inclusion of tools that read and write XPS...versus just the inclusion of APIs that enable this to be done. This is a bit like RealPlayer complaining about the inclusion of a high-end UI framework named "Media Player" that was built atop a lower-level Windows media pipeline that RealPlayer was just as dependent upon as Microsoft.

The whole premise that pre-inclusion gives Microsoft an "unfair" advantage has little economic basis. What is the most popular media player on Windows these days? Certainly not Microsoft's Media Player, given the wild popularity of iPod and its associated iTunes software. What is the most popular IM client? In some markets, it is MSN Messenger, but in others (namely the United States), that honor goes to AIM.

Pre-inclusion guarantees that a product is on a system, but doesn't guarantee that it will be used, particularly if the product lacks features that compare favorably with others on the market. Many machines used to come pre-configured with AOL. I'd sooner access the Internet by tapping in rhythmic fashion on powers lines running into my home while drenched in highly-conductive saltwater.

This is particularly the case now that the only people who don't know how to download software from the Internet are the cave creatures from the movie "The Descent" (which I just saw last night), which doesn't matter all that much because THEY DON'T HAVE COMPUTERS.

But this is indicative of a more fundamental issue in Europe, something I discussed in a previous post on the subject, and will repeat in somewhat different form today. The European Commission has interposed itself in the design process in a way that doesn't just complicate life for European customers and vendors, but make little sense within the context of basic economic theory.

The EC should not be in the business of telling private companies what they should or shouldn't put into their software products any more than they should be telling Renault not to include car stereos in order to encourage competition among radio vendors. In fact, there is even LESS reason to acquire such controls in software, because it is exceedingly easy to have multiple variants of a given software product in an operating system like Windows (I have multiple browsers, multiple IM clients, and multiple media players RIGHT NOW on my computer). This is in contrast to automobiles, where multiple radios might make you a poster child for MTV's "Pimp my Ride," but is unlkely to become very popular.

Furthermore, in the Internet age, the barriers to installing new products on computers shrink with each passing year. Firefox's growing market share and Adobe's pre-eminence as the cross-platform standard electronic document format have been established almost entirely via download. Likewise, iTunes is hardly a preinstalled Windows component.

Worrying about what Microsoft might put into Windows also puts the EC in a precarious position, because as I explained before, they MUST act as gatekeeper with respect to what Microsoft is allowed to include in Windows due to the fact that past rulings lend little in the way of guidance by which Microsoft might self-regulate. Why is PDF beyond the pale, but not RTF (just to add to the list of examples I had in my previous post on the subject)?

Acting as regulatory bottleneck harms Europe. A recent Microsoft-funded study claimed there will be 50,000 new jobs created from the rollout of Vista in Europe (a study conducted by IDC, a respected company that would harm its own business were it to release blatantly unfounded studies, but irrespective of that, the results shouldn't surprise anybody). I would argue, however, that a delay in Vista goes further, by making European companies less likely to be the leader in products compatible with Vista because Europe has a self-created lag in the form of a market that follows the rest of the world by months (maybe more) in the event of European-specific rollout delays. Just as South Korean companies benefit from a large market for broadband-oriented applications due to their high bandwidth Internet pipes and near-ubiquitous Internet connections into the home, the rest of the world benefits from early Vista rollout while smaller European companies wait for a European Vista rollout (large companies still can sell to global markets, something smaller companies are less able to do).

This is all easily solved, however, by understanding that governments designing products makes about as much sense as government setting prices. If the EC wants to do something useful, they should continue to push hard on the documentation side of the house, or tinker around the edges by insisting on making it easy for end-consumers to choose an alternative to a Microsoft pre-installed default.

What the EC shouldn't do is stick itself in the middle of Microsoft's product designs. It's unnecessary, as companies CAN and DO defeat Microsoft's pre-inclusions on a regular basis. More to the point, though, the uncertainty and slow pace at which these decisions get made actively harms the European market, and thus misses entirely the point of antitrust.