Microsoft likely to feel smack of EU antitrust ruling locally
Yet whatever the negative effects on the company's bottom line throughout the EU, market watchers claim that in Poland they will be mitigated by the country's dearth of broadband penetration.
Last month, the EC issued its decision against the world's largest software company, stating that it had violated the EU treaty's competition rules by abusing its near monopolistic position on the personal computer operating market. Despite the zł.2.38 billion (497 million) fine, the EC is demanding that Microsoft offer a version of its Windows Operating System to manufacturers and end users without its seemingly ubiquitous Windows Media Player.
"Following accession, the provisions of the EU treaty will be directly applicable in Poland," said Monika Tomczak-Górlikowska, attorney at Miller Canfield Poland. She explained that in some sections of EU law, new entrants are afforded a transitional period.
But that doesn't apply to competition issues, she points out.
Microsoft, as expected, is appealing against the ruling.
The market, however, expects that Microsoft will be required to follow part of the antitrust remedy - especially the unbundling of its Media Player.
And this is where Microsoft in Poland could have a smoother landing than in Western Europe, due to Poland's lack of broadband penetration.
"The effect in Poland will likely not be very significant," said Robert Maciejko, managing director at the Boston Consulting Group. "Multimedia players, such as Windows Media Player and Real can be important channels for income generation, especially when people download music for a fee or have subscription services with Microsoft, Real or other companies."
The country's economic shortcomings make it less of an issue, he explains.
"We still have limited broadband penetration and consumers have even more limited funds to pay for such premium services," says Maciejko. "As this changes, and overall operating system piracy declines, the issue may become more important."
Tomczak-Górlikowska explains the other aspects of the ruling beyond just the Media Player, which could be equally significant not just in Poland, but also throughout the EU. The Commission has ordered Microsoft to reveal to competitors the "interfaces" necessary for their products to be able to communicate with the Windows operating systems.
That's been one of the many bones of contention competitors have had with the software giant. PC users have hardly had any choice but to use all Microsoft products with the ubiquitous operating systems, boxing out competitors' technologies whether or not they are in demand from users.
The Washington-based firm faced similarly harsh scrutiny in the USA, where the antitrust authorities targeted Internet browsers rather than the EU's bother of media and server software. And much as was the case in the USA, the company is not taking this sitting down.
Asked what the EC ruling's effect might be on Poland, Inga Paus, Microsoft's Munich-based spokeswoman, asserted that the company is appealing and that that process could delay the effects, whatever they may be.
The company has publicly complained that the record EU fine was too steep for its stated infractions and accused the EU of trying to regulate something that was already regulated in the USA. The fine alone, however, would hardly put a dent in the company's roughly $50 billion cash pile.
And in the USA, Microsoft settled the antitrust case with the government in 2001, despite the fact that a U.S. appeals court is at present reviewing whether the deal was sufficient to reinvigorate software-market competition.
At the same time, the deal drew the ire of many key members of the American business community, who were still reeling from the EU decision to thwart General Electric, another U.S. business icon, when it attempted to buy Honeywell International.
The EU response was cold if anything.
Speaking at a competition law conference last week, EU Competition Commissioner Mario Monti said the remedies proposed "were the minimum necessary to allow effective competition."
As for the fine, Monti points to Microsoft's size.
"[It's] far from being the highest imposed by the Commission ... in absolute terms it is high simply because of the enormous turnover of Microsoft in the EU."
And with Poland and others joining the union next month, Microsoft's revenues will expand that much more.
Last month, the EC issued its decision against the world's largest software company, stating that it had violated the EU treaty's competition rules by abusing its near monopolistic position on the personal computer operating market. Despite the zł.2.38 billion (497 million) fine, the EC is demanding that Microsoft offer a version of its Windows Operating System to manufacturers and end users without its seemingly ubiquitous Windows Media Player.
"Following accession, the provisions of the EU treaty will be directly applicable in Poland," said Monika Tomczak-Górlikowska, attorney at Miller Canfield Poland. She explained that in some sections of EU law, new entrants are afforded a transitional period.
But that doesn't apply to competition issues, she points out.
Microsoft, as expected, is appealing against the ruling.
The market, however, expects that Microsoft will be required to follow part of the antitrust remedy - especially the unbundling of its Media Player.
And this is where Microsoft in Poland could have a smoother landing than in Western Europe, due to Poland's lack of broadband penetration.
"The effect in Poland will likely not be very significant," said Robert Maciejko, managing director at the Boston Consulting Group. "Multimedia players, such as Windows Media Player and Real can be important channels for income generation, especially when people download music for a fee or have subscription services with Microsoft, Real or other companies."
The country's economic shortcomings make it less of an issue, he explains.
"We still have limited broadband penetration and consumers have even more limited funds to pay for such premium services," says Maciejko. "As this changes, and overall operating system piracy declines, the issue may become more important."
Tomczak-Górlikowska explains the other aspects of the ruling beyond just the Media Player, which could be equally significant not just in Poland, but also throughout the EU. The Commission has ordered Microsoft to reveal to competitors the "interfaces" necessary for their products to be able to communicate with the Windows operating systems.
That's been one of the many bones of contention competitors have had with the software giant. PC users have hardly had any choice but to use all Microsoft products with the ubiquitous operating systems, boxing out competitors' technologies whether or not they are in demand from users.
The Washington-based firm faced similarly harsh scrutiny in the USA, where the antitrust authorities targeted Internet browsers rather than the EU's bother of media and server software. And much as was the case in the USA, the company is not taking this sitting down.
Asked what the EC ruling's effect might be on Poland, Inga Paus, Microsoft's Munich-based spokeswoman, asserted that the company is appealing and that that process could delay the effects, whatever they may be.
The company has publicly complained that the record EU fine was too steep for its stated infractions and accused the EU of trying to regulate something that was already regulated in the USA. The fine alone, however, would hardly put a dent in the company's roughly $50 billion cash pile.
And in the USA, Microsoft settled the antitrust case with the government in 2001, despite the fact that a U.S. appeals court is at present reviewing whether the deal was sufficient to reinvigorate software-market competition.
At the same time, the deal drew the ire of many key members of the American business community, who were still reeling from the EU decision to thwart General Electric, another U.S. business icon, when it attempted to buy Honeywell International.
The EU response was cold if anything.
Speaking at a competition law conference last week, EU Competition Commissioner Mario Monti said the remedies proposed "were the minimum necessary to allow effective competition."
As for the fine, Monti points to Microsoft's size.
"[It's] far from being the highest imposed by the Commission ... in absolute terms it is high simply because of the enormous turnover of Microsoft in the EU."
And with Poland and others joining the union next month, Microsoft's revenues will expand that much more.
