Has the European Commission’s Competition arm finally gone too far in its attempts to rein in Microsoft? It may have, based on media coverage of the Commission’s decision to threaten yet another round of fines last week.
Echoing the chorus of rivals and professional Microsoft-bashers, Neelie Kroes argued that Microsoft is charging too much for its technology and protocols, because “The commission’s current view is that there is no significant innovation in these protocols.” This is an amusing assertion for many reasons, not the least of which is that the Commission admitted (during the same press conference) that it hasn’t even read Microsoft’s descriptions of what is actually in the technology it is licensing.
While the Commission’s charges against Microsoft are usually received with open arms by the media and analysts, this time things are different. Even otherwise Microsoft-unfriendly analysts and commentators are realizing that the European Commission might no longer deserve the benefit of the doubt in its long running confrontation with Microsoft.
Analysts from the Yankee Group, Ovum, the Enderle Group, and even the College of Europe are crying foul this time. Perhaps the most creative and damninganalysis came from the UK-based Ovum analyst David Mitchell, who said:
The process could only be more farcical if the European Commission made its next announcement in a clown suit, complete with big red nose and ridiculously large shoes.
He went on to explain how the case will likely harm the overall European economy:
As a strong supporter of the overall European initiative, I can only look on this decision with shame. It will tend to make the European market look unattractive, protectionist, and a place that should be avoided by thriving new technology companies. The European Commission is damaging the prospect of the European economy and the European Parliament needs to intervene to bring sense to the situation.
I have conducted a straw poll since the latest Commission announcement, talking informally to a dozen software and IT services companies in Europe. Not one of these would start IT companies again in Europe, given the current climate created by the Commission. Oh, and the annual revenues of these companies add up to more than half a billion Euros. Draw your own conclusions by extrapolation…
Gary Barnet and Laurent Lachal, Mitchell’s colleagues and the heads of Ovum’s Open Source Group, are also calling foul on the Commission:
“The EC has shot itself in the foot and given Microsoft an opportunity to seize the initiative.”
The two suggest Microsoft should “Challenge the EC on the protocols that are covered by patents. This is where the EC is at its weakest. Without going as far as legally challenging these patents, the EC has in effect dismissed them on the grounds that they are not innovative. Whether or not this dismissal is founded is not even an issue here (and Microsoft should skirt around this issue quite carefully). The issue is that it is not the EC’s role to elbow out the US and European patent offices and start questioningthe validity of patents. “
Denis Waelbroeck, an expert on competition law who teaches at the College of Europe in Brussels and practices with Ashurst, a Brussels-based law firm, told InternetNews that “Microsoft is being held to a “double-standard.””
He said that the commission is being inconsistent by saying that the protocols are necessary to the survival of Microsoft’s competitors on the one hand, but that they have no value because they represent no significant innovation on the other. “Saying it has no value is difficult to believe.”
Yankee Group Senior Analyst Laura DiDio told the E-commerce Times that she thinks it is a witch hunt:
“The punishment didn’t fit the crime here, and quite frankly I don’t think there’s anything Microsoft can do to change the EC’s opinion,” she added. “I was all for the sanctions from the U.S. Department of Justice when it convicted Microsoft of monopoly, but that doesn’t mean Microsoft is wrong all the time.”
“This is supposedly a suit on behalf of corporate and consumer customers who have been damaged, but there is no plan in place to distribute that money to them,” she noted. “How is it helping these people, if the money’s not going back to them?”
Microsoft has made a genuine effort to comply with the commission’s 2004 order, DiDio said, including spending tens of millions of dollars making a version of Windows XP without Media Player, which it was forbidden to sell for less than the original version. “Retailers wouldn’t stock it,” DiDio claimed. “Now Microsoft can’t even give the stuff away.”
In the same E-Commerce Times article, Rob Enderle of the Enderle Group said:
“The folks that are complaining about Microsoft’s cooperation — including IBM (NYSE: IBM) — don’t really want cooperation, Their goal is to cripple Microsoft, and they’re probably not going to be happy until Microsoft goes under. Microsoft is in a bad position — almost an impossible position to get out of.”
Indeed, now “there are lots of examples of other companies interoperating with Microsoft, including Novell,” Enderle told the E-Commerce Times. “That suggests Microsoft is doing enough to keep one of the largest third-party developers up and running. They’re doing more than many others in their space.”
The real problem, though, is that “Microsoft still thinks this is about reality. IBM has figured out it’s about politics,” he said. “The end result is that Microsoft is not playing the game right. Its strategy just isn’t working.”