Slashdot Mirror
EU To Take Legal Action Against Microsoft
beebware writes: "The BBC is running this story about the European Union opening an antitrust case against Microsoft. It seems legal action has already started (a warning has been issued) - place your bets now on the outcome...." You can also check out the ZDNN story. The warning comes from a complaint registered by Sun Microsystems.
The DOJ's antitrust division has been having a lot more success in prosecuting international cartels since 1994.
De Beers (who handed the DOJ much of its humiliation in 1994 by refusing to show up at trial), perhaps the most notorious cartel (diamonds) pulled out of the US in 1945 under antitrust scrutiny. A month ago, however, De Beers decided it would start getting out of the cartel business and would position itself as a value-added brand-name, owing somewhat to increasing scrutiny by the EU but also a desire to reenter the US market. It can't be said that such regulatory pressure can be considered "normal free-market forces", but it does suggest that often full-blown trials needn't be necessary. Of course I have due-process concerns about plea-bargains and settlements in general, but that's a different consideration.
"If one is really a superior person, the fact is likely to leak out without too much assistance" -- John Andrew Holmes
OK, while IAAL, I have no significant competition law practice either on the UK or the EU law (although I know enough to say that if M$ is guilty by EU standards, they're also guilty by UK standards if the acts complained of at an EU-wide level were committed in the UK as well), so this is going to be fairly sketchy.
What's being alleged here is an offence or offences against Articles 85 and 85 of the Treaty of Rome, which binds everyone in the EU - it's a bit like the way Federal law in the US binds everyone in the individual States (and please, no pedantry from US conflict-of-laws experts, OK? This is a rough guide, not a detailed exposition).
Articles 85 and 86 provide that it's unlawful, in a manner which pretty much amounts to making it a criminal offence, to trade in such a way as to be anticompetitive or to abuse a dominant position in a market. Whether on the facts M$ have actually done either of these things is not something I can tell from any of the articles cited, though I would personally bet a reasonable sum that their ordinary way of doing business as revealed on discovery in the US DoJ prosecution will get the Commission fairly well exercised.
This is not the same as US antitrust legislation, even though it looks very similar indeed. The basic deal is that the European Commission (sort of the EU's Civil Service, only not quite - I told you this was going to be a rough guide) investigates and prosecutes offenders almost exactly the way a police force/prosecution service would for a national crime. The only remedies available are an order to terminate the infringement or, where it was committed "intentionally or negligently" a fine on turnover while the offending conduct continues - the EU can't do anything to M$ beyond that, whereas the US Courts can pretty much order Bill to commit HariKiri if they find him guilty.
There is virtually no political element to this. The Commission is not elected, and apart from the Commissioners themselves (one for each directorate-general, which is the name for the departments of the Commission, and a couple of head honchos like the President), there are no political appointees in the Commission. They're all career civil servants, accountable as to their budget to the European Court of Auditors and as to their actions in prosecution of governments and large corporations, to the European Court of Justice (not the European Court of Human Rights, which is a completely different institution, in a different building in a different city with different personnel and a different jurisdiction: it is vitally important not to confuse the two, particularly when filing an appeal.)
The amount of tax money that is going to be spent on this is, compared with the EU's budget as a whole, peanuts. (The EU's budget as a whole is peanuts compared with the national budgets of everywhere except Luxembourg and San Merino, but that's by the by).
M$ won't be able to drag it out, either. Commission prosecutions are usually fairly swift and fairly brutal. The Appeal from the Commission is to the European Court of Justice, a body that grinds exceeding small but does grind rather slow. And an appeal does not usually stay execution.
As to the fine, it's up to 10 per cent of turnover. M$ might be able to mitigate by immediately ceasing and desisting and generally playing nice from now on, but that's more or less it. While one per cent is the usual, this does mean fines of the order of £200-250 million get levied on a fairly regular basis, and appeals don't usually succeed (the Commission has a limited budget, and only acts when it is fairly sure it will win).
Basically, though, that 10 per cent is the maximum penalty, reserved for the real baby-eating satanists of the European Single Market's competition landscape. M$ might be bad, but I doubt they'll be found to be that bad.
-- AndrewD
A Maze of Twisty Little Laws, All Different.
If all the more suitable, appropriate potential complainers (like OEMS, distributors or what have you) are all too intimidated and cowed to complain, why not Sun? If Sun, too, was so frightened of Microsoft that they dared not open their mouth, would that make it OK?
The EU has had MS under investigation since before the DOJ went to court. They stated back at the start of the trial that they would wait to see how the DOJ case went before finding there own.
This is just the 2nd of a long string of anti trust actions. The downside of being an international company is that when you are accused of a crime you can be prosecuted in any or all of the countries in which you operate.
--= Isn't it surprising how badly I spell ?
to see how this case turns out. In one corner you have powerful American megacorp of Microsoft, already under DOJ fire. And then you have the large international governing body that is the EU.
If this case goes through it will definitely be a nice precedent to see how American corporations comply to foreign laws and governing bodies. If MS loses, it would be good to see American companies forced to take responsiblity for their dishonest actions in regard to the international circuit. However, as much as I want MS to get a stern slap in the face for its actions, I hope whatever decision doesn't fuck up MS further than the DOJ suit did. True they're an 'evil, greedy corporation' but considering how entrenched they are in the PC market, it's still not safe to have a major software paradigm shift occur abruptly.
Emerson Willowick: Thinker, Writer, Human Being.
But when dealing with a foreign company that simply imports products, what will the EC do? Impose tariffs? Fines? It is difficult for them to remedy or ameliorate the situation without harming their consumers.
"...99% of all major companies USE Microsoft products."
True.
"They use then because we are safe in the knowledge that they have been strenuosly tested for deployment in large scale organisations."
Unproven. Without asking each company why they MS products, you have no way of knowing why they do so. For instance the only reason my company uses MS is because so many companies use MS. We have to be able to read Word files. Etc.
"I for one, would not even consider using Linux at work..."
Can't argue with that. However, I can add an additional opinion: I not only consider running Linux, I DO run Linux (at home and at work). Furthermore, now that I've spent 9 months running Linux at work, I refuse to go back to Windows. There is a possibility that I will be asked to go to Windows development full-time at my current job. If that happens, I will quit. Not because I love Linux, but because I hate Windows.
And don't think this is some irrational "I refuse to bow to The Man" thing. When I use Windows, I feel cramped and uncomfortable:
--No virtual screens? But alt-tab-tab-tab-tab takes a lot longer than ctrl-arrow
--No grep/diff/awk/sed/find? (yes, I know you can get these elsewhere--but why not just use Unix?)
--No real shell-scripting? How am I supposed to automate my nightly builds?
--A lot of rebooting?
--DLL Hell?
--ETC!
You can argue all you like, but the fact remains that people are MOVING to Linux. What people use NOW makes no difference--what people SWITCH TO is what's key.
--
Linux MAPI Server!
http://www.openone.com/software/MailOne/
(Exchange Migration HOWTO coming soon)
You didn't even get past the second sentence. Tut tut.
And again here:
There's also some rank stupidity:In conclusion, I find you guilty of a severe violation of the mutual exlusivity law with only rank stupidity as a mitigating circumstance.
You are hereby sentenced to 10 years Windows NT administration.
Government of the people, by corporate executives, for corporate profits.
The Washington voters are actually perfectly rational here. Although consumers in general would be benefited by Microsoft being forced out of being a monopoly, there would be a cost. The cost of harming Microsoft (or even Microsoft losing its monopoly... monopoly rents are very useful...) is born largely on the people of Washington.
It is easy for us to criticize them. We'd get the benefits and not pay the costs. They'd pay the costs and not get the benefits. Do you really not understand why they wouldn't want that?
Alex
Monopolies - gotta catch 'em all.
Micro~1.oft has been pulling the same games in Europe as in the US. This includes withholding Dos/Win/Nt from any PC manufacturer who doesn't exclusively sell only M$ products. This makes it impossible for any competitors such as SolarisX.86 from being offered or supported in the marketplace. That is just the start of the charges being brought against M$.
There are also ongoing investigations into the "Embrace - Extend - Extinguish" methodology in the open protocols arena. Kerberos, M$-CHAP, SMB, and some others are being investigated. It is possible the prosecutors will not shy away from the technical attacks the way the US prosecutors did. The issue is complex, but there is hope the court will take the time to understand the criminal aspects of micro~1.oft's behaviour, and that it extends into every area of their business.
The courts have also been asking companies for documented examples of FUD, vapor products which never made it to market, exclusionary licenses, and targeted advertising campaigns. There has apparently been an overwhelming response from companies fed up with M$ monopolistic behaviour.
the AC
Hemos is like...sci-fi fans;he thinks technology is cool, but he hasn't bothered to understand the science it's based on
Here are two reasons why:
1. 99.9999% of the time, it is not applied to ensure 'fairness in the marketplace', but rather as a strategic weapon by less successful competitors. This is flat out immoral, and it's so obvious I'm surprised more Slashdotters can't see right through it.
This is the same situation that occurred when Tonya Harding had Nancy Kerrigan roughed up with a pipe before the winter Olympics.
Examples: *Netscape* started the action against MS in the US, *Sun* started the action against MS in Europe, *Tribal Voice* is pushing the FTC and FCC to act against AOL, *Discover* started the antitrust action against Visa/MC, and the list goes on and on, *ALL THE WAY BACK TO PRECIOUS STANDARD OIL*, which was brought down in the same way, at the behest of its competitors
2. Antitrust law is vague and open-ended, revolving around nebulous concepts like 'unfair competition' and 'bundling' instead of more quantifiable, tangible criteria.
If a company prices its products:
Too low - it can be charged with 'predatory pricing'
Too high - it can be charged with 'price gouging' or 'intent to monopolize'
Similar to its competitors - it can be charged with 'price fixing' or 'collusion'
Example 1: "The European Commission said it had sent a 'statement of objections' to the US software giant 'for allegedly abusing its dominant position in the market for personal computer operating systems software by leveraging this power into the market for server software" (from the BBC story) Buncha psychobabble.
Example 2: Microsoft went into the DOJ trial simply being charged with integrating a browser into their OS, and very quickly the trial delved into a whole host of other unrelated issues.
I understand that most people here hate Microsoft. I don't particularly care for them myself.
The slate of recent competitor-brought antitrust action, however, is far more anti-competitive and destructive to the marketplace than any of Microsoft's real or alleged crimes. To encourage these dirty tactics to continue is to sink to a level lower than that of Microsoft.
If Linux is going to win, it should happen because of the hard work and dedication of the thousands of people and companies who are contributing to it. It should not happen because we tilted the marketplace in our favor by using the force of government to get the main competitor out of the way.
--
according to conventional business wisdom as taught in business schools today, here's where you've gone astray: monopolies are more profitable corporations, but a good chunk of their profits are considered bad for the economy because it comes from the monopolist decreasing its production in order to raise prices. Having few customers enjoying the benefits of a product, and paying more for it, is bad for the economy, antithetical to the point of a free market.
So, while there are legitimate reasons why corporations want to merge and grow (and illegitimate ones like CEO compensation), you need to separate out the monopoly part to get a valid analysis. Microsoft is worth less if they are not a monopoly, and that is why the parts seem to be worth less than the whole, but that extra value was hijacked from the free market so virtually all economists agree they don't deserve it.
The other main reason "bigger is better" for the owners is because of economies of scale and learning curve advantages. The largest producer is the lowest cost producer in most industries, and they can thus earn the highest profits in a competitive market, and that's the main reason to seek out mergers. But, regulators need to be wary that monopolies don't emerge from the consolidation.
Other things you said have less validity. Management overhead at 10% is a pretty high estimate, and disacquisitions do take place, a lot. Buyers of Palm (from 3Com) don't think they are "losing money" on management, and virtually all of the giant conglomerates of the 70s were broken up in the 80s. The economy particularly benefits when investors get to choose narrow product lines to invest in, rather than baskets of unrelated things where some dogs can drag down the average and sap the company's strength.
Finally, while we agree that the MS breakup is a good thing, I think you are filled with too much doom and gloom about the short run. I think you are underestimating the penalty that consumers are paying to Microsoft today. So, while there might be some economic slowdown immediately surrounding Microsoft, it will be more than made up for by the savings experienced by consumers of their products which money becomes available for other uses, and by the investment into competition for Microsoft now that investors feel they have a shot at success. Heck, there will even be a burst of activity from the MS pieces doing new deals with former foes. I would expect a huge boom. The telecommunications boom did emerge overnight, even if there are a small number of customers who experienced problems.
this post is too long and took too long to go back and read in this little window ... mea culpa for any errors :) and any disagreements aside, thanks for the thoughtfulness and civility
Both Iowa and Washington state have been noted to include this in their party plank. As a FYI, Rep. Jennifer Dunn gave Washington's delegate count during last night's rolling roll call at the convention and it was she who pointedly referred to the Microsoft case.
This is another view of the world.
Microsoft is an example of why anti-trust laws need international bite to back them up, if the global community is serious about using them to bring monopolies to heel. It was fortunate that Microsoft was located in a jurisdiction where US anti-trust law could get at them directly. However, what if they were based in Canada? How about Finland? Even better, what about Japan or South Korea, countries where what the English-speaking world would view as collusion, corruption, and anti-competitive business practices are routine parts of trade?
Possibly as part of the GATT (General Agreement on Tariffs and Trade) negotiations, the issue of a global monopoly-busting body is likely going to come up some day. Is such a thing possible? Could it work, or would it just become another political football that the US, EU, and Japan would kick back and forth?
Any sufficiently advanced technology is indistinguishable from a rigged demo
--Andy Finkel (J. Klass?)