DOJ Calls EU Microsoft Decision "Unfortunate"

ogma writes "This one is especially ironic after the recent slashdot story on more of Microsoft's underhanded actions coming to light. It seems that the DOJ thinks Europe was too hard on Microsoft in its anti-trust ruling.. According to Assistant Attorney General Hewitt Pate, the fine 'may send the wrong message about antitrust enforcement priorities'..." Open Council writes "The Register points out that the EU has provided Microsoft with a major victory over its Open Source rivals because it will now be allowed to pursue royalty revenue from the APIs it publishes. Jeremy Allison says that the projects such as Samba, which he jointly leads, may face a prohibitive hurdle. The size of the fine is peanuts to MS but will be a bargain if it can lock out Open Source projects from using its API's."

Comments

Too hard?

[Omni Magnus]

I don't think fining a business with 40 billion in the bank 500 million is harsh. I think the DoJ wanted them to get a slap on the wrist like always.

Re:Too hard?

[lpp]

I imagine any corporate assets within reach of the executive powers of the EU (i.e. whatever body is in place to enforce such rulings as the EU just made) could be seized in order to compensate for the fine.

Likewise, any officers of the company's European branches could possibly be prosecuted for failing to comply with the order of this body.

As a final parting shot, if that didn't satisfy them, I suppose it is also possible that Microsoft would no longer be able to do business in the EU, but that would be a more diplomatic/political issue and given the federated nature of the EU, much less likely to succeed I would think as some nations might not want to anger Microsoft (or the US, for that matter) by locking them out.

But IANAL, corporate, international or otherwise, so what do I know?

Even when MS looses it wins!

[iplayfast]

It doesn't seem right to me that a royalty could be charged for using api's. The api's are there and can be used by any software. Isn't that the purpose of an OS? That is, to provide an interface layer between the programs and the hardware? The royalty is payed for by the consumer when they buy the OS.

Re:Even when MS looses it wins!

[deman1985]

It sounds a lot like the royalties that game companies have to pay when writing code for consoles (or at least they used to). If Microsoft even starts to contemplate charging royalties on every single program that people write and distribute for the operating system, I can bet we'll see one of the largest shifts to Linux development in history.

Poor solution to the wrong problem

[heironymouscoward]

Fining Microsoft sounds fine but it's the wrong tool for several reasons. First, it will force Microsoft to raise prices in other ways, so the fine is a hidden tax on consumers. Second, it does not change the underlying problem, which is that Microsoft have been allowed over the last decade to establish a position from which they can control prices in a market almost devoid of real competition. Third, the timing is poor, since the EU and US are on the edge of a trade war, and the US will certainly use this as an excuse to raise barriers on EU businesses. Lastly, Microsoft will appeal and this will take years, during which there will be much argument and hostility, with no positive changes to show for it.

I don't believe for a second that Microsoft will take this fine as a warning that merits a change in behaviour. They will simply spin it into an advantage, one way or another.

What needs to be done is establish and enforce international free-competition standards via the WTO. Then, if a US company is found to be breaking these, the problem can be addressed to the right place, namely the US government.

The EU could achieve much more in the arena of competition by correcting the injustices of the patent system (which turns it into a tool for market control by large businesses), and by mandating the use of OSS licenses in all software that is developed for the EU bodies themselves.

From Groklaw : Bush to "Engage" the EU

[anandpur]

From Groklaw :
Washington State's Senator Murray Asks Bush to "Engage" the EU

"'This ruling is yet another example of the EU assaulting a successful American industry and policies that support our economic growth,' said U.S. Senator Patty Murray, a Democrat from Microsoft's home state, Washington. . . .
"Murray called on the Bush administration to 'engage' the EU in settling the case. 'The EU has now directly attacked the authority of the United States and our economy in general,' she said in a statement. 'American jobs and economic interests are threatened,' she said."

Um. "Engage"? She doesn't mean sending in troops or anything, does she?

Joke.

Wait a sec. Who assaulted who? Isn't the issue whether Microsoft broke the law over there? If they did, does she suggest it shouldn't matter, because they simultaneously give Americans jobs? The article points out that corporations that do sufficient business in Europe are subject to their laws, something they could avoid by not doing business there. They could also avoid consequences by not breaking any laws. I believe that would entail reading them

Force compliance, don't impose a fine

[ahodgkinson]

• "It would have been better to levy no fine, but to force Microsoft to provide these interfaces into the public domain. This would allow the possibility of real competition. Allowing Microsoft to remain in control in any form over the interface disclosure leaves the competitive landscape unchanged."

Why not an injunction instead of a fine? Removing less than a billion dollars from Microsoft's $50 billion in cash isn't going cause Microsoft to do anything differently. At most it will be a embarrassing publicity problem.

The EU's goal is to provide a competitive environment where other companies will have chance. This can only be done my making Microsoft compete fairly, which means forcing a change in their corporate behavior. This won't happen by confiscating 2% of their yearly revenues.

Microsoft has shown multiples time that it is unwilling to do business on a level playing field. So instead of a fine, how about immediately imposing an injunction on Microsoft making it illegal to sell their products in Europe until they comply with the EU's terms. I think this is the only way to get them to change their corporate behavior.

Re:What the EU did was perfect, fuck the DOJ.

[mwood]

"Imposing antitrust liability on the basis of product enhancements and imposing 'code removal' remedies may produce unintended consequences," Pate said. "Sound antitrust policy must avoid chilling innovation and competition even by 'dominant' companies. A contrary approach risks protecting competitors, not competition, in ways that may ultimately harm innovation and the consumers that benefit from it."

This is a very interesting quote, as it can be read two ways. I agree that we should avoid chilling innovation and competition even by 'dominant' companies, and Microsoft has been doing an excellent job of chilling innovation and competition by trying to lock everyone else out. It's time to put a stop to that.

Hypocrisy

[plopez]

MS is also engaging in blatant hypocrisy. On one hand, they argued that since they had already had an anti-trust case in the US which they lost that the EU had no reason or right to extend the penalties beyond what was already done. They were already and ONLY bound by the US decision. On the other hand, after losing (or suffering a setback in) the Lindows case in the US (IIRC) they are now jurisdiction shopping across the globe because the US courts did not rule in their favor. Go figure...

Re:This fine is completely bogus anyway

[pandrijeczko]

Will you still be saying this when you can no longer make MP3s from the CDs you own, can no longer make legitimate backup copies of the software you paid money for and cannot run the applications you want to run because Microsoft considers it to be "unlicensed" or a "security threat"?

Don't like RealPlayer? Fine don't use it, but then go find an Open Source or commercial media player that does not dictate what you can and cannot run on your PC - because that's precisely what WMP is starting to do now and will do more and more in the future.

In that way, you'll preserve your freedoms a while longer... and while you're at it, ditch IE and get Mozilla.

Thoughts

[RAMMS EIN]

``The European Commission's order for Microsoft Corp. to ship a version of Windows without the Windows Media Player could stifle innovation and help Microsoft's rivals instead of promoting fair competition, the U.S. Department of Justice's antitrust chief said Wednesday.''

Well, yes and no. Disallowing MicroSoft from bundling their apps with the OS gives competing OS and application vendors a competitive advantage. However, this _promotes_ rather than stifles competition, because, as it stands, MicroSoft pulls all the strings. I agree that assymetric measures like this should be avoided, but the system is out of balance and won't function properly until we rebalance it somehow.

I see it as a punishment; in principle, you are allowed to bundle anything with anything you please, but if you use bundling as a weapon to push competitors out of the market, the court can forbid it.

Earlier, I objected that bundling is a service to the consumer and should therefore not be limited, but I realize there is a solution: if MicroSoft can't bundle, a third party still can. They could then select the things to bundle from every product on the market, and given enough bundlers, every software gets a fair chance; at least, theoretically.

Great Positioning

[4of12]

Even though MS, sitting on US$6e10 cash can easily afford the penalty, I'd say to the EU:

1. Drop the fine entirely.
2. Prohibit bundling of new features on top of the basic OS unless all competitors including MS have an equal opportunity to that desktop.
3. Open the API's to complete, free access to make a level playing field for all comers to innovate on top of Windows, not just Microsoft and not just those willing to sign NDA's or pay a toll charge.

[I'm a US citizen and I don't think the EU decision is at all out of line. The US DOJ action does not seemed to have increased Microsoft's competition on the Windows desktop or innovation in general by one iota. But we're still getting charged.]

Re:It's the DOJs fault

[Fulcrum of Evil]

MS is now forbidden from playing price games with Windows. They absolutely can not threaten or cajole OEMs to do their evil bidding.

Weren't they forbidden from doing that back in 1993? I must be getting old, because I could swear that this had already happened once before.

Re:Congrats, EU, you just killed Samba!

[SysKoll]

Even if Samba has been shut out in the EU, Linux has not.

You're correct, BiggerIsBetter, but keep in mind that most companies have a lot of Windows server. They see the cost going up, as well as security and reliability problems, so they want to deploy Linux without too much trouble. That's where Samba comes in. Samba allows drop-in replacement of Windows servers. It represents one of the main Linux opportunities that open the door to OSS in corporate and small business shops. Remove Samba and all these Windows shops are effectively trapped into MS forever.

Do you see why Samba is so important and why removing its threat is such a victory for MS?

Optimistic people think that Samba will continue reverse engineering new MS protocols. But the conjunction of patented protocols and for-pay-only specs makes this a shaky proposal from a legal perspective. I doubt Samba can afford long, protracted legal fights. So this stupid EU ruling might well be the weapon that will keep future versions of Samba from being compatible with new Windows protocols.