Too big to lose
Hasn't Microsoft Corp. endured enough already? As if being found guilty of anti-competitive practices by the U.S. government in the antitrust trial of the decade
wasn't enough, the American computer software giant now faces similar charges by the European Commission.
The European Commission, the European Union's (EU's) executive branch, alleged earlier this month that Microsoft violated the EU's antitrust rules requiring companies with dominant positions in any market to give their competitors information about their products.
Sparked by a complaint filed in 1998 by Sun Microsystems, Microsoft's rival in the United States and Europe, the commission is examining whether Microsoft refused to supply information about its Windows operating system to other software manufacturers. Microsoft has said that it has already made available technical information to enable the software of other vendors to work with its Windows operating systems.
The case follows on the heels of another investigation in February when the European Commission launched a probe of Microsoft for allegedly abusing the dominance of its Windows 2000 in the market for software servers, the programs that enable big computer networks to operate. Despite the investigation, Microsoft introduced Windows 2000 to the market in February as scheduled.
Now Microsoft has until early October to respond to the commission's new charges and to request a hearing. If Microsoft is found guilty of violating the EU's antitrust rules, it could have to pay up to 10% of its annual sales, or upward of $20 billion. Although it's unlikely that the commission would set a precedent by charging the maximum fine, it's probable that it would require a fine of a lesser amount along with an order for the company to increase its technical disclosure.
Meanwhile, Microsoft has called for an appeal of the U.S. ruling in early June when a district court judge in Washington found the company guilty of predatory tactics in protecting its monopoly in the market for operating-system software. The case was based on a complaint that Microsoft tried to dominate the market for internet browsers by abusing the monopoly of its Windows operating system for PCs.
After Microsoft lost its drawn-out U.S. antitrust case, the judge ordered the company be split in two entities one to sell its Windows operating system and the other to sell all the company's other products, including internet services and software programs such as Microsoft Word and Excel. The judge also ordered the company to disclose technical information about how its operating systems interacted with its software. But the order has been stayed until the appeal is resolved, allowing Microsoft to carry on its business as usual.
Nevertheless, the American ruling has set the course for the outcome of the EU's case. It has gone beyond straddling a fine line between ensuring a fair, competitive and transparent marketplace and forcing a company to divulge corporate secrets that make its products attractive to consumers. It's as if a world-class chef were forced to reveal to his rivals the special ingredients of his most famous entre so that they could create the same dish to win over some of his gastronomic aficionados.
The complaints that prompted the cases have nothing to do with consumers actual computer users but with disgruntled competitors looking to knock Microsoft down a few notches. Had Sun Microsystems, Oracle or any of Microsoft's other competitors developed equally successful products, they would have undertaken the same protective, if not anti-competitive measures in the eyes of the regulators, to secure their leading positions on the market.
But while it's likely that both the EU's new case and the appeals hearing in the United States could possibly drag on for a year or two, Microsoft will remain the dominant worldwide player on the software market.
Without a doubt, Microsoft has revolutionized software and made it easier for all computer users to cope with the information age through its ubiquitous user-friendly Windows operating system the standard operating system used in much of the computerized world and its Internet Explorer browser.
Microsoft may lose millions on high-price attorneys and a government-imposed fine from the EU, but in the end the company will not be weakened or lose its dominant market position.
Furthermore, given Microsoft's billions, it's unlikely any EU-imposed fine would wreak financial havoc on the company. Nor will the company's products disappear from computer store shelves or stop being used by computer hardware manufacturers that install Microsoft software in their products.
Finally, Microsoft may get it wrists slapped by antitrust regulators on both shores, but it will come out virtually unscathed since the company is already restructuring its operations and its products to fend off any impact from the American order for a breakup should Microsoft lose its appeal.
