Steelie Neelie slaps Microsoft with record fine

When Neelie Kroes burst on the scene as EU Commissioner for Competition with a hefty swipe at Microsoft back in 2004, my thoughts at the time were something like: 'Out of touch, doesn't get the issues.' Four years on and her agenda is unequivocal.

When Neelie Kroes burst on the scene as EU Commissioner for Competition with a hefty swipe at Microsoft back in 2004, my thoughts at the time were something like: 'Out of touch, doesn't get the issues.' Four years on and her agenda is unequivocal. Drag Microsoft into line - whatever it takes.

Last week, Mary Jo Foley posited that Microsoft's interoperability announcement was an attempt to fend off an impending fine. Today, her suspicions are confirmed:

Not only was it hoping for one more chance to claim openness around its Office Open XML document format, but it was also hoping to head off another hefty antitrust fine from the European Commission.

Mary Jo backs up her position detailing Microsoft's answers to a series of questions about the timing and impact of its announcements. Given what Microsoft did (or rather did not) say, it's hard to disagree. Mary Jo's further analysis is interesting:

I’ve had some serious qualms about the EC antitrust case against Microsoft, primarily because I never felt that the EC proved customers were harmed by Microsoft’s actions. It proved, instead, that Microsoft’s competitors were harmed.

I disagree. As we know, Microsoft's competition was front and center in providing the EU with information to support the case against Microsoft so to that extent, Mary Jo is right. But I'd equally argue that when you damage competition, you reduce choice and effectively hold customers to ransom. The long term effects pile expense onto business in ways that many of my colleagues believe is unacceptable. In conversation among the Irregulars on a non-related issue, Vinnie Mirchandani correctly pointed out that enterprise buyers are often at a hopeless disadvantage when faced with the large vendor sales people. Customers rarely account for more than a few percentage points of any large enterprise vendor's revenue yet the vendors have masses of information on what they need to do to close deals. Customers can only glimpse at the true economics of the vendor community. Vendors insist on holding firm to renewal and 'maintenance/support' fees often in the 17-22% range for software that is often 10, 15 or 20 years old. Where is the value in that?

In this case, Microsoft had plenty to fear. Open source may only be a small part of current enterprise expenditure but the fact Sun just closed its acquisition of MySQL at $1 billion speaks volumes to the perceived future value of services that can be built around 'free.' Barely a day goes by that I don't see innovation blossoming in the hands of 'free' yet this is what Microsoft has fought so hard against. Call me a cynic but when your time is done, it's done. As Hugh MacLeod has said: "Microsoft, change the world or go home." Today's fine would imply that isn't happening. And it is on that basis that I concur with Mary Jo where she says:

But I have to say I do agree with the EC that Microsoft was trying to drag its feet as much as possible when it came to providing the promised protocols. Adding insult to injury, Microsoft acted like it made last week’s announcements out of the goodness of its heart, instead of because of the hope it could stave off another big fine.

According to The Register, Microsoft is considering its position. I have no idea why. It simply doesn't make sense to continue this fight which Steelie Neelie is determined to win and which so far has done nothing to rebuild Microsoft's credibility. Talking as it does about past misdeeds yet continuing to fail in the eyes of the EU is not smart. It may be born out of the notion that the market always decides. Yes it does. But this time, the market is in the hands of someone with more clout than the execs at Redmond. Time to draw a line on this one methinks.

UPDATE: John Carroll provides an excellent insider view on this issue. He appears to agree with the 'management speak'  problem.

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