What will Microsoft's loss in Europe mean to customers?

What will Microsoft's loss in Europe mean to customers?

Summary: Word is out: Microsoft has lost its appeal of the European Commission's antitrust decision. Forget the spin from Microsoft, the EU and lobbyists. How will the Court's September 17 ruling affect customers in Europe and elsewhere?

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Word is out: Microsoft has lost its appeal of the European Commission's antitrust decision. So now what?

There's no word yet if Microsoft will appeal again, which it has two months to decide whether or not to do. If it doesn't, the company will be forced to pay the $700 million fine, plus a big chunk of the EC's court costs. It also will have to finally find a way to make all of the server communications protocols and related documentation that it has been ordered to provide available fto its competitors.

(Sun and Novell -- now both staunch Microsoft allies -- were among those server vendors who were insisting on Microsoft making these protocols publicly available. Now that they're enmeshed in patent/interoperability alliances with Microsoft, I wonder if they care anymore.)

My biggest question in all this is how will the Court's September 17 ruling affect customers in Europe and elsewhere?

If you believe Microsoft's lobbyists, the decision means the end of the free-market economy and will be dire for Microsoft consumers and partners. If you believe the European Commission, the decision will create more consumer choice and all kinds of new market innovation. Communications protocols and their documentation will be provided. Bundling by Microsoft of applications and technologies for which there are non-Microsoft alternatives in future versions of Windows will be frowned upon.

Does the ruling affect Windows Vista? Office 2007? The pending Windows 7 and Office 14 products? If it does, I'm not sure how. Will today's ruling help Microsoft's competitors, such as Firefox, Adobe, Google? Maybe, if any of these competitors bring a new antitrust case against Microsoft to try to force Microsoft to cut XPS (Micorsoft's PDF alternative) or Vista's integrated desktop search and create yet more versions of Windows.

Microsoft isn't pulling its products out of Europe (as it threatened to do at one point). It will continue offering the Media-Player-less versions of Windows to consumers there,even though no one seems to be buying them. Another Microsoft watcher wondered about the impact:

"Much has been written in the United States about how anti-trust is supposed to be about protecting customers rather than competitors; it's not clear a similar philosophy is shared by the EU in this case," said Peter O'Kelly, an analyst with the Burton Group. "In the grand scheme of things, I don't think forcing Microsoft to, e.g., offer a version of Windows that un-bundles Windows Media Player or other basic features, is going to foster improved competition; I doubt European customers would be happy to use deliberately dumbed-down products in order to help EU commissioners reduce Microsoft's market share to what they somehow believe is a more appropriate level."

Me? I think it will be a good thing if today's decision results in Microsoft not bundling currently standalone products for which there are alternatives from third-party vendors  into future releases of Windows. Let users decide what kinds of add-ons they want and from whom they'd prefer to get them. Otherwise, I'm not sure that today's judgment means a whole lot to business and consumer users.

What do you say, readers?

Topics: Windows, Microsoft, Software

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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79 comments
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  • EC wins, Consumers lose

    Monti chjose his victim well. In its determination to attack Microsoft, the Court of First Instance endorsed the power of the EC to
    - redesign products in order to remove features cusotmers approve
    - confiscate IP and supply it to competitors in order to make them more successful.

    Those are essential powers in a command economy, in which a bureaucracy decides what is made available and how many can be sold. The Court of First Instance has created a position which has more influence over the EU economy, and secondarily the world economy, than any other.

    The only "customer" in Europe who matters is now Neely Kroes.

    Microsoft is not, of course, the only company against which this power will be used. In any indistry, there are competitors who/which think it worthwhile to substitute government power for the decisions of the marketplace. Given the hostility to business, arrogance, and easily-influenced ignorance the EC showed in the Microsoft case, they can approach the EU economy's owner with confidence that money and manipulation will succeed. So long as the request is to intervene in a manner emotionally satisfying to the bureaucrats.

    But there is some hope.

    Every company, Microsoft included, now knows where the center of power can be found. Staff can be hired to deal with legal issues and to keep the EC staff, the owqners of the economic world, flattered outrageously.

    The EU legislature can be lobbied to pass legislation whioch puts some rational limits on the actions of the Czar. This will be expensive, but justifiable as righting an obvious wrong.

    Companies can make arrangements, including payments, to prevent other companies from bringing potentially damaging cases.

    In short, business now has an obligation to deal with government even more intensely in the EU than in the US.

    And every business, Microsoft included, is now in the unofficial position of consumer advocate. The Court of First Instance has fully endorsed the principle that competition is more important than consumer benefit or satisfaction. As the businesses fight for the freedom to sell products customers want, even when that results in a large market share, customers are entirely aligned with their interests.

    Odd to think Microsoft has become a campaigner for freedom. But that's what happens when dictatorship encounters what the public wants.

    The real verdict will be Microsoft's next quarterly profit statement. As a supporter of human rights, I'm glad to expect that Europe will keep right on contributing to the fight.

    But, I have to admit... Microsoft in the right? That is strange.
    Anton Philidor
    • No,actually

      Microsoft loses and consumers win. ]:)

      Now the market can and will make the choices once the field is level.
      Linux User 147560
      • Wait a minute...

        "Now the market can and will make the choices once the field is level."

        The field is level and has been for quite some time. Yet consumers continue to choose Windows. They also choose Windows that includes media player over the version that does not.

        You're going to have to stop wishing that Linux's failure is due to Microsoft abusing their monopoly and accept that it's failing because users want Windows.
        ye
        • RE: The field is level and has been for quite some time.

          Now if only you had some authority and enforcement power your opinion could just override that of the EU judiciary.

          [b]They also choose Windows that includes media player over the version that does not.[/b]

          So, if an OS producer/publisher says that one of the products that it is forced to produce is defective by design consumers aren't going to buy it instead of the "regular" version? Whoda thunk it!! The "market" really spoke there, huh?

          [b]...it's failing because users want Windows.[/b]

          Yup, control of the embedded market, major penetration of the mobile market, preloaded on virtual unknown manufacturer's Dell and Acer. One can't argue or dismiss that kind of failure.

          Oops! Ya spilled your coffee. About 6 years ago and haven't had another sup since...

          No more wakeup calls will be forthcoming. (Click.)
          Still Lynn
      • Okay.

        Suppose the market continues to choose Microsoft. Would you advocate that the EC require that Europe have available only a special version of Windows removing features that consumers and developers appreciate?
        Anton Philidor
        • IF after Microsoft complies

          and the market continues to choose Microsoft then se la vie. BUT I think with this landmark case and with Microsoft having not only to comply but pay for it's transgressions (love it when the guilty get punished!) people will start to choose Linux and a balance of 60% Windows, 25% Linux and 15% Macintosh on the desktop will appear. Will it happen over night?

          No, but I believe that eventually this will be the case now that the giant has finally been brought to it's knees for unfair practices that have PREVENTED others from fairly competing. Spin any way you want, Microsoft has been convicted yet again in another court. How many convictions will it take for you and others to get it?

          The problem is here in the US the conviction ended with nothing more than a slap on the wrist and it's business as usual. Of course when you have politicians in your back pocket (unlike the EU, MS money couldn't buy leniency in the EU courts!) it's easy to get off with nothing more than a finger shaking and "don't do it again!"

          What is really ironic is the pro MS camp is royally ticked off because their favorite team was finally beaten for breaking the law and they couldn't buy their way out of the @ss whipping. ]:)

          Seems to me, as has been pointed out by others, Microsoft if finally getting the s#*& kicked out of because of Linux and people are fed up. OOXML loss, this loss, the scandal of stealth updates... this is the tip of the list of recent issues that have pi$$ed people off. Finally someone (the EU) had the cajoles to stand up and say enough is enough. ]:)
          Linux User 147560
          • I think you're stuck back in time.

            "IF after Microsoft complies."

            I believe Microsoft has complied. The only thing I see this ruling affecting is if Microsoft writes a ~$600M check.
            ye
          • Erm...

            I'm not entirely sure the trustee looking at the API documentation has given it the "all clear" yet. So, to say they've complied is a stretch, especially as today's decision/declaration was about Microsoft's appeal to the Court of First Instance, not anything to do with if they have actually complied.

            A hint that they had complied might be people actually having the API stuff with Microsoft's "reasonable and non-discriminatory" pricing available to them. I don't think (but I could be wrong) that that has happened.

            So, I think compliance has yet to be seen.
            zkiwi
          • Yes, the price still has to be set.

            The EC confiscated Microsoft's IP because it was (supposedly) essential for other companies to compete. The EC wants to set a price of $0 because the essential IP is without value.

            Yes, you see the contradiction. Tell the EC.
            Anton Philidor
          • One would get the impression they're just embarking on...

            ...this compliance journey. The anti-trust ruling was made back in 2004. It's 2007 today. There has been some level of compliance to the ruling:

            1. Microsoft has released a non-media player version of Windows. Almost all consumers have rejected this version in favor of the version that include media player.

            2. Microsoft has released some details of the protocols in question. While they may not be everything ABMers want the fact is they've released information about them.

            About the only thing they haven't done is write a ~$600M check. I doubt this ruling is going to change anything other than Microsoft writing a ~$600 check. Maybe they'll release a few more details about their protocols. To which I expect it will have almost no impact on Windows market share.
            ye
          • Accept no substitutes (or weak rationalizations)!

            As further punishment for their continued remorseless abuse of market power and near-endless justifications as to why they should be allowed to continue as before, they have to provide API definitions (sometimes erroneously called IP, unless that is actually the abbreviation for Interface Protocols) to competitors for free now instead of being able to charge whatever they want on top of the unfair practices that they must now discontinue.

            What customer would ever complain about that?
            Still Lynn
          • I believe MS has already written the check.

            The fine is valid and will continue until they do comply. That is what this ruling did - it validated the EU ruling.
            nomorems
          • If the check was already written then this essentially means nothing.

            As far as the market is concerned. The punishment has already been doled out so I don't see this as a win for the market. In the end the market has already shown there is little interest in a version of Windows without a media player (thus validating Microsoft's position that people want a media player bundled). Furthermore the lack of success with OSS has demonstrated that protocol specifications weren't holding back adoption of Linux. In the end all this did was validate Microsoft.
            ye
          • RE: I believe Microsoft has complied.

            Well then, you should go to YouTube and watch the video and see if the Court agrees with you or with themselves and the EC.

            They now have 120 days to comply. Have they complied so fast that it happened in the past? Or is reality intruding on your fantasies again?
            Still Lynn
          • The EC wasn't standing up for consumers...

            ... as shown by the response to XP Null. The bureaucrats were standing up for themselves and gaining the power to control the EU economy more than most people in the US could imagine.

            Microsoft was selected because the Judges who would review the case could be expected to find the company unsympathetic.

            As far as the rest of the world's attitude toward Microsoft is concerned, the best indication is going to be the measure of brand value.

            To give the benchmark, in the most recent measure, Microsoft was the most valued and respected brand in the world.

            The company had dropped lower in the top 10 when troubles accumulated, but steady marketing brought it back. The investment in brand pays off because the result is an attitude of Of course I'm going to buy Windows; what else is there?

            Beyond that, Microsoft has the many people who assume that their computers will work when they turn on the machine. The role of Windows isn't well understood, but it doesn't have to be.
            Anton Philidor
          • ill give you point on that one

            as far as finding a unsympathic compagny EU hit its will full force but i also think that EU wannted to make a exemple that how buiseness will be done in EU so they attack the biggest of them all to make a name for themself and with the same hit they level the play field . but even if we like it or not its done and i dont think taht EU will change it point of view on that .

            They choose how buisness will go in EU from now on .... period

            they are sovereing in there territory and its there right. Is this a new cold period between USA and EU mayybe
            Quebec-french
          • Again, not about consumers but about suppliers. Quit the red herring! (NT)

            NT
            nomorems
    • Consumers lose?

      Why have MS public statements and your posts, which echo them so accurately, not attempted to make the point? We hear repeatedly about "confiscation of IP" and "designing products", yet never a claim that servers run at full efficiency when designed to the the published inteface specs. If customers are not harmed, why doesn't Microsoft just say so, rather than claiming a right to supress information?

      As for product design, nowhere in any statement or ruling that I have seen has EC made shown knowledge or interest in how Windows is designed. Certainly there have been claims on MS part, for example, that IE was spaghetti coded through the OS, but that seems to be an ancient claim and not pertinent to most recent releaese. I can't imagine why EC would care about details of product design any more than say DOT cares how manufacturers meet bumper standards - as long as they meet them. But you say EC wants to participate in design - very interesting.

      Anyway, if you can provide references on either item it would greatly enhance your credibility and that of Microsoft.
      IT_User
      • Aspects of the case

        The EC demanded protocols that helped Microsoft server software run better with Windows. Microsoft claimed these were good programming; the EC considered the code inappropriately hidden secrets.

        Opinion: I don't care which assertion is correct, so long as the EC is restricted from demanding IP to help the competition. If Microsoft is wrong, set a penalty without a damaging precedent.


        On product design, XP Null exists because the EC designed it.

        The original demand was for a version without media capabilities in addition to MediaPlayer. Microsoft complied. Real complained because its software used the capabilities, too. The EC ordered Microsoft to put the capabilities back, and criticized the company for doing as it was told.

        Of course, the capabilities are the important change to the OS, not a removeable... interface like MediaPlayer. But this is the EC we're discussing.


        I wasn't describing anything new. The EC "admits" doing what I've described, because the agency wants the recognized power to do what they did.

        Now the regulatory agency has those powers, and the economy of the EU will be affected.
        Anton Philidor
        • PS: Good to see you again. (NT)

          .
          Anton Philidor