Linked by Thom Holwerda on Mon 17th Sep 2007 15:17 UTC, submitted by Rahul
Legal Microsoft suffered a stunning defeat on Monday when a European Union court backed a European Commission ruling that the US software giant illegally abused its market power to crush competitors. The European Union's second-highest court dismissed the company's appeal on all substantive points of the 2004 antitrustruling. The court said Microsoft, the world's largest software maker, was unjustified in tying new applications to its Windows operating system in a way that harmed consumer choice. The verdict, which may be appealed only on points of law and not of fact, could force Microsoft to change its business practices.
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RE[6]: APIs
by MollyC on Tue 18th Sep 2007 18:08 UTC in reply to "RE[5]: APIs"
Member since:

"I don't know if it's on purpose or not but it seems to me that you are taking what one EU anti trust commissioner says, quoting it out of context, putting your own spin on it and equating that with the rest of the EU. You also seem to be ignoring how MS attained 95% market share in the first place.


(Microsoft attaned 95% share in desktop OSes because Apple didn't compete in the OEM OS space, preferring to charge relatively high prices for Macs, and Unix vendors charged thousands of dollars for their OS and dev toos, and they didn't work on low-end machines. I'm not sure what you think was nefarious about that.)

Having said that, I'll continue. ;)

SReilly, I'm not misinterpreting anything (intentionally or otherwise) at all. Maybe I was too glib.

Here's what I see is going on.
The EC guy wants to bring about what he considers to be a level playing field for competition. He explicitly states that he measures whether the competition playing field is level by measuring marketshare. His theory is one of two things (or both):
1.) If there is a dominant player, then it means that the playing field is not level.
2.) The surest way to bring about a level playing field is to ensure that there's no dominant player.

Do you agree with me so far?

Therefore, in order to bring about a level playing field, he will employ methods designed, not to directly level the playing field, but to bring about a particular marketshare, i.e. one where there is no dominant player, and therefore achieve a level playing field as a result. Do you agree with me on that?

And this is what I have a big problem with. I don't think that a company having a dominant marketshare is evidence in itself that there's not a level playing field. Maybe that company is just better at satisfying the customers. Nor do I think that a company's having a dominant marketshare is evidence enough that either the company should be punished; or that the company shouldn't be punished, per se, but that market requires more government manipulation to bring said marketshare down.

In short, I think that the goal should be to bring about a playing field where all compete, rather than that there no dominant players.

I think this is a difference between European and American mindsets (you're European, I think). While both Europe and the US have used government regulation of business for social good (anti-discrimination laws, anti-polution laws, child-labor regulations, etc), Europe has had a much greater history of using government to manipulate the market itself (Eastern Europe's history with communism, and Western Europe's history with socialism to a much larger degree than in the US). Given that history, Europe more readily accepts the idea of government dictating what goes on in a market.

I've read that US antitrust laws are about helping the consumer while EU antitrust laws are about helping the competition. There is a subtle difference here. US antitrust law is based on the theory that a competitive market leads to higher quality and/or lower prices, which helps the consumer. But once remedies are in place to level the playing field, it's up to the competitors to make use of that level playing field, and if they can't, too bad. European antitrust law is based on the theory that healthy competition is a good in and of itself, and government's role is to help competitors, regardless of whether such intervention helps the consumers (e.g the government-mandated XP-N that consumers simply don't want and never called for), or even to the (unintended) detriment of consumers (e.g. if EU banned XP altogether and only allowed XP-N to be sold in Europe, it would be to the detriment of consumers (due to the inconvenience for them) for the purpose of helping competing OSes (that would be able to trumpet the fact that they ship with a media player but Windows doesn't) or helping competing media players (regardless of the fact that Microsoft and Real have already settled their differences, which were at that heart of the WMP case)).

Another difference between the European mindset and the American one, is that I read at arstechnica, that there's an EU law that says that if a company achieves greater than 40% of a market, then it must start helping its competitors (through bundling, advertising, etc). Such a notion is laughable in the US.

Both EU and US law are about a vibrant market, but the priorities and the way they go about achieving it are different.

Edited 2007-09-18 18:19

Reply Parent Score: 2

RE[7]: APIs
by SReilly on Tue 18th Sep 2007 22:46 in reply to "RE[6]: APIs"
SReilly Member since:

The EC guy wants to bring about what he considers to be a level playing field for competition. He explicitly states that he measures whether the competition playing field is level by measuring marketshare. His theory is one of two things (or both):
1.) If there is a dominant player, then it means that the playing field is not level.
2.) The surest way to bring about a level playing field is to ensure that there's no dominant player.

First of all, it a she, not a he. ;-p

Secondly, if you actually read everything that Ms. Kroes has been saying about this case from the beginning, you will understand that the context is all wrong.

Ms, Kroes does not want to beat MS down because they have 95% market share, she wants to remove that market share because it was obtained via illegal means. If you read up on your governments own economic history, you will find many parallels that obviously have nothing to do with either European or US views on socialism.

Sure, MS took alot away from greedy Unix providers (although there where many DOS publishers at the time) but once MS got a foot hold with Windows, anybody else was specifically disallowed to compete. (By the way, MS ripped off CP/M for DOS, originally developed in the eastern European block during Communism ;-p)

Just take BeOS as an example. OEMs where specifically told to not provide duel boot systems, with both Windows and BeOS installed, or they would lose out on partnership re bait deals. Next, lets look at personal Bill Gates emails leaked on the internet speaking of him wanting to obfuscated the ACPI specifications so that Linux could not use them.

Are you are trying to some how tell me, against all evidence, that MS is not in anyway guilty of abusing they're market position? Certainly not by avoiding the point and definitely not by arguing about something that the US has allot more of then you seem to know about,i.e. socialism. Just check out all the US trade unions that are currently lobbying you government.

Reply Parent Score: 3

RE[8]: APIs
by MollyC on Wed 19th Sep 2007 20:54 in reply to "RE[7]: APIs"
MollyC Member since:

The US/MS trial specifically said that MS did not obtain "monopoly" through illegal means. And the EC "trial" didn't address that issue at all.

As for your examples, like BeOS, you say that MS told OEMs that if they allow dual-boot then they would lose out on obtaining Windows at the discounted OEM price (i.e. a price below the normal OEM price). This is standard business practice; providing special deals to those that use your products to the exclusion of competing products. It only became "illegal" in Microsoft's case, because a judge ruled years later that Microsoft had a monopoly at that time years before

Which is another problem I have with antitrust law:
ex post facto rulings and retroactive punishment. It should be that a judge/government must make an official declaration that a product has a "monopoly" in a particular market and THEN the company that makes the product can change its practices accordingly, and be punished if they do not. As it is, a company must second guess everything they do on the *chance* that a judge *might* someday in the future rule that they had a monopoly at some time in the past. That is utter BS. Microsoft's OEM deals were standard deals, fully legal by anyone that doesn't have a "monopoly", and the deals were made at a time before Microsoft was declared to have a "monopoly". Sorry, I do NOT consider that to be evil by any stretch of the imagination.

Now, I've heard it argued that Microsoft should have known that they had a monopoly before any official declaration. There are some problems with that theory:
1. OS/2 Warp was still a competitor, was being heavily advertised by IBM, and was being shipped on IBM PCs. So there was a valid competitor to Windows at the time.

2. Microsoft had invested $150 million into Apple, a company that was on the ropes at the time, and *many* said that Microsoft did that to keep competition alive so as not to run afoul of antitrust law. If so, then they took explicit steps NOT to become a monopoly. They didn't realize that a judge would rule that Macs didn't even compete with Windows computers (which went against conventional wisdom, otherwise, why the endless debates about Mac vs Windows if they aren't competitors at all?). Judge Jackson narrowed Windows market to "desktop OSes on Intel-compatible CPUs" as a way to eliminate Macs from consideration, and make it easier to declare Windows to have a monopoly.

Back to my previous point, no matter what anyone tells me, I say that before a company can be punished for abusing its monopoly status, the government must officially rule that the product in question has monopoly status, and can only punish a company for actions taken after that point. That is only fair, and it's so simple that a 5-year old would understand it. A company must know exactly when the rules that it is being held to have changed; until that time, a company should do what it would normally do; you can't run a company by second-guessing everything you do.

You guys talk of "Microsoft broke the law" all the time, without admitting that the rules changed behind Microsoft's back because nobody told them they were a monopoly. (Sorry, I'm using the slashdot posting technique of repeating myself over and over. ;) )

Here's another point, and this I got from an arstechnica post:
"It sometimes seems that the thinking here is: once you are declared a monopoly, all the rules change. So far, so good ... but wait, where is the rulebook that you must switch to once you have been declared a monopoly? Where can you find the definitive list of 'things I can do, things I can't do' in the Rulebook For Declared Monopolists? How does a declared monopolist change status and become a declared not-monopolist again?

This rulebook seems missing, so anyone can come to the argument and say 'they are a monopolist, therefor what they did was bad and they should be punished'. Dang. No way to refute that!"

What he's saying is that even after being declared a monopoly, there is no rulebook that says what you can and can't do, and the EU has been playing that game to a tee. During Vista's development, Microsoft continually kept the EC aprised as to what they were doing, asking whether it ran afoul of EC law. The EC kept saying, "It's not up to us to tell you if these features are illegal, it's up to you to comply with our law" which is another way of saying, "That's for us to know and you to find out". The EU has never provided a rulebook for Microsoft to follow, which allows the EC to make any ruling it wishes and justify it by saying "The rules are different for you because you are a monopoly!" That is more BS.

You know why MS and the US DOJ have such an amicable relationship now? Because the result of the MS/DOJ trial was a settlement that included explicit rules, regulations, and internal and external oversight committees. Microsoft doesn't do anything without getting OKs from its internal and then the external oversight committees. Which is why the DOJ has sided with MS regarding Google's complaints; because Goolge complained about actions that the oversight committees already OKed. This is why, even though the oversight is scheduled to end in Nov 2007, Microsoft asked that certain portions of the settelment be extended to 2012, and potentially beyond. Because they like having clear rules.

The EU, on the other hand, doesn't want any clear rules, so they can maintain the ability to punish Microsoft after the fact, and at their whim, leveling fines, not so much to enrich the EU's coffers but to look tough to the public.

Finally, Judge Jackson's monopoly ruling is no longer valid today. Windows does not have a monopoly on "desktop OSes for intel-compatible CPUs". First, Dell ships Linux PCs. Second, HP ships Linux PCs. Third Lenovo (sp) as delclared they will ship Linux desktops. And finally, Jackson cleverly narrowed Windows market so as to rule out the Mac, but guess what, today OSX is a "desktop OS that runs on intel-compatible CPUs". So from where I sit, today there is no monopoly (not the one that Jackson declared), so there should be no special rules for Microsoft anymore (which is one reason that the MS/DOJ settlement was scheduled to end in Nov rather than being open-ended, because things DO change over time).

The EC woman, on the other hand, says she will consider that things have changed, only by Microsoft losing marketshare. Even if every OEM sold Linux PCs and Jobs let every OEM sell OSX computers, if Microsoft didn't lose marketshare the EC would still consider MS to have a monopoly. And that is the definition of "lame".

Edited 2007-09-19 21:14

Reply Parent Score: 2