Are the EU Rules for Microsoft Reasonable?

[Ohmer]

Record EU Fine for Microsoft

I know there is already a thread about this. I want to have a more reasoned discussion. I completely agree that Microsoft broke the rules and they are being fined because of it. My real question is this:

Should dominating the market require you to do things to help your competitors?

As I understand it, the EU is saying that Microsoft must provide information about its OS so that rival companies can develop software that directly competes with Microsoft software. It seems very weird to me to force a private company to do that. If they didn't dominate the PC OS market, this would be seen as completely unreasonable.

I'm trying to think of another industry where this kind of thing has happened and I really can't. I would be interested in other examples.

 

[drkitten]

I'm trying to think of another industry where this kind of thing has happened and I really can't. I would be interested in other examples.

Actually, this kind of monopolistic abuse is/was quite common in the late 19th and early 20th centuries, which is where most of the anti-trust legislation came from. It hasn't been seen more recently precisely because the regulators exist and are sensitive to this kind of concerns nowadays.

Example: railroad car pooling, where railroads were required to make their unused cars available to competitors, or more generally mandatory rights of way, where I could force you to allow me to run my trains on your track instead of having to build my own track to an area where you have a monopoly. More recently, local telcos have been required to allow competitors to connect to "their" wires instead of running a whole new set of copper to each house.

 

[Nick Bogaerts]

Record EU Fine for MicrosoftAs I understand it, the EU is saying that Microsoft must provide information about its OS so that rival companies can develop software that directly competes with Microsoft software. It seems very weird to me to force a private company to do that. If they didn't dominate the PC OS market, this would be seen as completely unreasonable.

Absolutely. Microsoft have a monopoly in Operating Systems. There's nothing wrong with that from a *legal* point of view. What they cannot do, however, is use their dominance in one field as leverage against competition in a different, related field.

That is, Microsoft's bundling of the Media Player with Windows provided them with an unfair advantage over Real, and their bundling and dumping of a rebranded Spyglass as Internet Explorer gave them an unfair advantage over Netscape.

In both cases, it proved lethal for the innovators, and the consumer suffered--between the effective demise of Netscape and the rise of Firefox, the field of web browsers, dominated by Microsoft alone, was effectively stagnant. We've lost at least five year's worth of innovation due to that.

 

[tsg]

In addition to what others have said...

Should dominating the market require you to do things to help your competitors?

It isn't so much about helping competitors as leveling the playing field. The real motivation for it is that competition is good for the consumer.

As I understand it, the EU is saying that Microsoft must provide information about its OS so that rival companies can develop software that directly competes with Microsoft software. It seems very weird to me to force a private company to do that. If they didn't dominate the PC OS market, this would be seen as completely unreasonable.

That is true. But if Microsoft didn't dominate the PC OS market, they wouldn't have an unfair advantage in the application market.

 

[Ohmer]

Example: railroad car pooling, where railroads were required to make their unused cars available to competitors, or more generally mandatory rights of way, where I could force you to allow me to run my trains on your track instead of having to build my own track to an area where you have a monopoly. More recently, local telcos have been required to allow competitors to connect to "their" wires instead of running a whole new set of copper to each house.

Thanks. This is exactly what I couldn't think of. Forcing the 800lb gorilla to give up some of it's gain is not unprecedented and in general worked out well for the consumer.

What I think is interesting is that a company like Apple who has complete control of the hardware and software its sells is held to a different standard because they have such a small market share. No one is demanding that Apple sell a machine without itunes, iphoto, ietc so that other companies can have the opportunity to sell similar products. How big does Apple have to get for this to no longer be "fair".

 

[drkitten]

What I think is interesting is that a company like Apple who has complete control of the hardware and software its sells is held to a different standard because they have such a small market share. No one is demanding that Apple sell a machine without itunes, iphoto, ietc so that other companies can have the opportunity to sell similar products. How big does Apple have to get for this to no longer be "fair".

Actually, that's not true -- complaints have been filed against Apple, but they've mostly been dismissed, because they've not been provable. And it's not simple "size" that's the issue. It's the abuse of size; Microsoft is using its control of one part of the market to establish control of others. I.e. if you don't use OUR browser, you can't use OUR operating system. Apple has never acted to preven other people from installing third-party music players on its computers, and so the fact that iTunes has become a de-facto standard is strictly due to merits and not to undue intimidation on Apple's part.

 

[Gazpacho]

The reasonableness of the EC's position can be judged from all the shots Microsoft fired in the dark trying to hit the target that the EC was telling it to hit. Such as offering source code at no charge, and offering support for the source code at no charge.

It can be judged further by the farce in which an advisor to the EC, whose credential is "hacker," was told to use Microsoft's documentation to clone the server protocols. He gave up after no more than 14 hours and said it couldn't be done. (People like that don't get hired at Microsoft.)

And further by the EC antitrust division's decision to judge the "innovativeness" of Microsoft's patents, instead of deferring to existing procedures for invalidating a patent.

And further by the absence of any demand for Windows XP N, the version without Media Player.

It can be judged further still by the fact that the new "rules" (whatever they are) are being applied to Microsoft, and not to Sun, or Oracle, or RealNetworks, or IBM.

 

[Gazpacho]

I.e. if you don't use OUR browser, you can't use OUR operating system. Apple has never acted to preven other people from installing third-party music players on its computers

Microsoft has never done either of these.

 

[Gazpacho]

Oh, let me tell you a little story from when I worked at RealNetworks (on the RealArcade team).

One day I was in a status meeting with a few other developers and a test manager. The subject of Real's legal dispute with Microsoft came up, and one of the developers asked what the dispute was about.

The test manager laughed and said "Microsoft had the audacity to play media files! Only Real is supposed to be able to do that."

Yeah, even inside Real it's a joke.

 

[drkitten]

Microsoft has never done either of these.

This is simply untrue; read the US DOJ reports.

 

[Gazpacho]

This is simply untrue; read the US DOJ reports.

I'm very familiar with the DOJ litigation. Microsoft has never prevented anyone from installing a browser other than IE or a media player other than WMP on Windows.

 

[KoihimeNakamura]

I should note that IE7 asserts it's dominance even after told not to.

 

[Gazpacho]

Care to be specific?

 

[Tumblehome]

I don't know about the legalities, but from a strictly logical view, an operating system (which Microsoft sells Windows as) doesn't need a media player and internet browser to run the computer.

 

[El Greco]

As I understand it, the EU is saying that Microsoft must provide information about its OS so that rival companies can develop software that directly competes with Microsoft software.

I don't understand the specifics of this. Anyone know what kind of information has MS been holding back and exactly what kind of advantages that information gave to which MS software ?

Also, what is the difference in relevant anti-monopoly legislation between the US & EU ?

Yes, I know I could probably Google all of the above...

 

[JonnyFive]

Apple has never acted to preven other people from installing third-party music players on its computers, and so the fact that iTunes has become a de-facto standard is strictly due to merits and not to undue intimidation on Apple's part.

Although, to be fair, Apple's iTunes does use a proprietary format that makes it a massive pain in the ass to play the songs you buy on non-iPod music players, or burn them to MP3 CDs for the car (yes, it does let you burn audio CDs, which are for tools that like to only have 10 - 15 songs per CD).

iTunes is a great piece of software in many ways (more specifically, its music store is great), but Apple certainly uses its clout to influence consumer behavior. Granted, I think this is more of a DRM issue than anything else, but Apple could do a lot more to make playing its files possible on non-Apple hardware.

They probably won't, because they want to sell iPods just like Microsoft wants to sell operating systems.

 

[El Greco]

Although, to be fair, Apple's iTunes does use a proprietary format that makes it a massive pain in the ass to play the songs you buy on non-iPod music players, or burn them to MP3 CDs for the car (yes, it does let you burn audio CDs, which are for tools that like to only have 10 - 15 songs per CD).

iTunes is a great piece of software in many ways (more specifically, its music store is great), but Apple certainly uses its clout to influence consumer behavior. Granted, I think this is more of a DRM issue than anything else, but Apple could do a lot more to make playing its files possible on non-Apple hardware.

They probably won't, because they want to sell iPods just like Microsoft wants to sell operating systems.

And that's why those of us who made the mistake of buying an iPod now use Rockbox to solve most of these problems.

 

[rwguinn]

I'm very familiar with the DOJ litigation. Microsoft has never prevented anyone from installing a browser other than IE or a media player other than WMP on Windows.

I use Firefox, Netscape, and IE on my windoze machine. No problems at all;
I have Real, Winamp, Magix, NERO, and have used ROXIO and numerous others on my Windows machine--from Win 95 all the way to XP (the only one I couldn't get 3rd party for was Win XP64)
So where's the leverage? Where is the force? WHAT DAMN MONOPOLY?
The fact that MS provides these things with the purchase of Windows simply makes them cheaper--you don't have to pay an outrageous price for basic stuff. The competitors object to that, and the EU courts are in their pockets? Who knows.

 

[JonnyFive]

And that's why those of us who made the mistake of buying an iPod now use Rockbox to solve most of these problems.

Neat.

I wish the solutions for burning the iTunes BS format to MP3 so I can put it on my car mix CDs was a little simpler though. I've used a few programs to do it, but they're all pretty picky and sensitive to iTunes versions.

 

[tsg]

I use Firefox, Netscape, and IE on my windoze machine. No problems at all;
I have Real, Winamp, Magix, NERO, and have used ROXIO and numerous others on my Windows machine--from Win 95 all the way to XP (the only one I couldn't get 3rd party for was Win XP64)
So where's the leverage? Where is the force? WHAT DAMN MONOPOLY?
The fact that MS provides these things with the purchase of Windows simply makes them cheaper--you don't have to pay an outrageous price for basic stuff. The competitors object to that, and the EU courts are in their pockets? Who knows.

The leverage is in the fact that a) you get IE with Windows where Microsoft does have a monopoly making it unnecessary for most people to get another browser and b) you can't uninstall it.

In order to understand why this is a problem you have to go back to the browser war and really understand what it was about. It wasn't about making IE a standard, it was about protecting the monopoly on the operating system. Briefly, Netscape was on the verge of producing a platform that would make it possible for people to write applications that could be run on any OS. Microsoft didn't like that because it was a solution to the "chicken-egg" problem as one judge so eloquently put it: people won't use an OS until there are sufficient applications to run on it and software developers won't write applications for an OS until there sufficient people using it. Microsoft benefits from this problem and so it was in their best interests to make sure it didn't get solved. Bundling IE with Windows was all about making Netscape unnecessary so they couldn't get their OS-independent platform in general use. In short, they used their dominance in the marketplace to quash competition which is what anti-trust laws are all about.