Why Has Microsoft Office Evaded European, US Justice?

Today's decision by the European Court of First Instance upholding previous fines and penalties against Microsoft is neither surprising nor newsworthy.The European government has traditionally taken a stronger stand and imposed more stringent sanctions against the U.

Today's decision by the European Court of First Instance upholding previous fines and penalties against Microsoft is neither surprising nor newsworthy.

The European government has traditionally taken a stronger stand and imposed more stringent sanctions against the U.S.-based software company for its alleged anti-competitive practices than did its Washington, D.C. counterpart, which (under a new Republican administration in 2000) rendered what was essentially a slap on the wrist against Microsoft in spite of it being found guilty of violating two sections of the Sherman Antitrust Act.

Over the past decade, government sanctions and monitoring efforts on both sides of the pond have helped level the playing field for competitors, allowing Linux, for example, to gain significant market share in the server operating system software market and Firefox to achieve respectable share of the web browser market against Microsoft’s once ubiquitous Internet Explorer.

How did Office get left out of the equation?

After a decade of watching antitrust actions, proceedings and findings against the software company, what I find most surprising is Microsoft's deft ability to evade government scrutiny and penalties in the Office software front, where it still owns 95 percent share and faces no significant legal or business threat to that market stronghold even today. Hats off to Microsoft’s product teams, PR machine and legal strategists for holding down that very lucrative fort.

In the late 1990s, the U.S. Department of Justice seriously considered filing charges against Microsoft on the Office applications front but instead chose to focus on anti-competitive business behavior, server protocols and Windows’ integration of Internet Explorer. The Europeans likewise went after Microsoft’s business behavior, server issues and “tying issues,” this time focused on the integration of Windows media player with Windows.

While both were able to wrest concessions out of the company, neither side has taken a direct swing at Microsoft’s monopolistic hold over the Office applications market or leveled the playing field for competitors. OpenOffice, for example, has amassed backing of many Microsoft rivals (including the recent recruitment of IBM) and is considered the only serious competitor to Microsoft Office but it is a threat that the powers-that-be in Redmond can still afford to laugh off.

In homage of its market standing, Microsoft has battled (perhaps appropriately) to establish its Office Open XML file format as an ISO standard. Why not when it still controls 95 percent share of the market and the alternative – which already has ISO approval – is incorporated in a product that has little to no market share of its own?

OpenOffice.org’s marketing project lead John McCreesh noted that “unless there is complete and transparent auditing of Microsoft’s APIs and source code” there will not be a level playing field for competitors. Filing a formal complaint on the office front is a legal option but that’s not in the budget of an open source project, McCreesh quipped.

So isn’t that what government regulators are for?

Some (including McCreesh) would argue that successful antitrust sanctions imposed on Microsoft and the Windows operating system more generally (and the emergence of the web as the platform for future desktop computing) paves the way for more competition and alternative desktops operating systems such as SUSE Linux and Ubuntu Linux and desktop Office alternatives such as OpenOffice and GoogleApps to prosper in the long term.

What about today? Web services are coming but Office applications continue to drive the success of the Windows desktop operating system. While OpenOffice runs on multiple platforms, it is tightly linked to Linux and neither open source offering has been able to garner much market share to date. It's not a coincidence that Linux on the desktop has failed to muster much commercial success as the Office monopoly continues. The lack of access to Microsoft Office Application Programming Interfaces and inability for competitors to license Office protocols will continue to frustrate market acceptance of alternatives such as OpenOffice.

So much for justice.

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