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EU/Microsoft Antitrust Case Delves Into Tech
oscartheduck writes "ZDNet is reporting on the Microsoft/EU case, and things aren't going too well for the software giant. The Commission is delving deeply into the technical issues surrounding the case. In addition to 'a record $617 million' that may well be leveled against the American monopolist, Microsoft is also standing accused of knowingly going forward with marketing practices 'that had already been judged illegal by U.S. courts when it was used on Microsoft's Internet Explorer browser.'" More from the article: " The founder of the Samba team of developers, which took years to create print and file server software that works with Windows, said his team is held back and playing catch-up. 'The tiny device I have here in the palm of my hand is the sort of product that could emerge if the information required by the Commission were available,' Andrew Tridgell said, holding a paperback-size storage server that he said could be turned into a work group server. Once it gives over the information, 'Microsoft no longer has a stranglehold over the world's networks,' he said. "
First, the entire Nasdaq is up by almost that much. This just falls in line with the rest of the market.
Second, Microsoft has its thumb in over a hundred pies. Take a look at all of these news stories, especially the one on profit estimates. This case won't be resolved any time soon and there are plenty of other things going on.
Developers: We can use your help.
After reading a little about the case, my understanding was that the commission is asking Microsoft to publicize their protocol standards so that it encourages competition. As my understanding goes, competition is not based on knowing how your opponent does what he/she does; it is based on if you can do better than your opponent.
What you are missing is an understanding of anti-trust law. You're looking too much at the specifics and not enough at the law and the reason for the law. You should read up on anti-trust law if you want to truly understand the topic.
Here is a short and dirty explanation. In most jurisdiction it is legal to have a monopoly. Whether the monopoly comes about because you make an innovative new product, or the nature of the industry, or geography, or some combination does not matter. Having gained a monopoly, you have done nothing illegal (necessarily). Once you have a monopoly, however, the law restricts you from using that monopoly in such a way as to gain an unfair advantage in another market. My stock explanations almost always involve cheese for some reason. Say you gain a monopoly on televisions; all well and good and legal. Now you decide, I think "I want to open a business that sells cheese as well. Since everyone has to buy a television from me or go without (I have a monopoly) why don't I just raise the price on TV's $3500 and give away a free lifetime supply of my cheese with it." It's brilliant! The cheese need not be as good as the competition, nor do I have to be able to make it cheaper. People will buy it anyway, because they want TVs. And what of other cheese sellers? Most will go out of business.
What happened in the above situation? The new cheese seller did not innovate better or cheaper cheese. In fact they might have more expensive and less tasty cheese. Still they have taken over a market. What happened is they used bundling to to bypass all the benefits (innovation, lower prices, etc.) that are brought about by the free market. Worse, there is nothing stopping them from parleying each of their two monopolies into yet more monopolies. People realized this was a bad thing long ago, and simply passed laws preventing it, for the good of consumers and the state of the industries.
Moving right along, we come to tying. What if, instead of bundling the two products together (like cheese and televisions) we just tied it to another product. Say we made all the TVs detect anything in between them and the cable TV and stop working if they found something. And then we added a special (patented) connector to the TV that hooked up to a VCR. Since only our VCRs worked, we'd quickly own the VCR market as well as the TV market. Maybe that would be too unsubtle. What if, instead we used a secret, encrypted protocol for the remote control, so people who bought VCRs from other people had to have two remotes, while ours only needed one. And in addition, what if we added a special connector that plugged into our new telephones and turned the TV volume down when you picked up the phone (but only our brand of phones). Well, we wouldn't take over the markets right away, but we would have an advantage over our competitors. And maybe we could sell cheap and crappy phones and VCRs at higher prices, since we were the only ones that worked with the TV that easily. Is there anything wrong with that?
According to the law in almost every country, yes. Consumers should not have to pay more and use crappier phones and VCRs just to gain the benefits of having them interoperate with TVs.
MS is not tying TVs and VCRs. They are tying their desktop OS (monopoly) with their server OS (which is gaining market share and selling well). Their server OS is slower, multitasks more poorly, is more expensive, is less secure, is less stable, and lacks a number of very useful features other server products have. People still buy it though, because it is tied to the desktop OS monopoly by being the only server that can speak the secret AD and Exchange protocols.