Microsoft’s EU Punishment First of Many

The EU commission’s decision about Microsoft rose some heated discussion on nearly every part of it. Let’s take an accurate look at it and discuss the hows and
whys of the act that is going probably to change Europe’s technological assets in the near future.

Editorial Notice: All opinions are those of the author and not necessarily those of

Note: English is not my mother tongue, please excuse any grammar/syntax errors.

The good, the bad and the ugly media player

The decision of the UE commission number IP/04/382 of the 24th march of this year represents a milestone in UE’s history of vision of technology and computer
system evolution history. The commission is not new at decisions on informaticion and generally technological oriented matters, suffice to remember the decision
that three years ago fined heavily Nintendo for abuse of position in the market of console videogaming. But surely never the knife had cut this near to the center
of the real problem on the battlefield of the operative system for desktop computers and low server market. The decision is composed by a preamble with some
comments from EU commissar Mario Monti (responsible for antitrust matters) and then composes itself of three precise fines:

-First a monetary one (the infamous 497,2 million Euro, rougly translating in 613 million dollar counter value), by ease the higher ever inflicted in the story of the

-A second one forces Microsoft to reveal not later that 120 days accurate and complete informations on interfaces that consent to non Microsoft server working
groups to get to the complete interoperability with PCs and server that works with Windows.

-Last but not least the commission sentenced Microsoft to offer a stripped version of its Windows OS without the windows media player in a time segment of 90
days from the sentence.

Useless to say MS appealed itself to the European court of justice in Louxembourg and things will run smoothly till the said court’s decision. Decision that will take
some time (even if I do not agree with the catastrophic prevision of 2009 made from Assistant Attorney General Hewitt Pate form Department of Justice).
The decision is complex and prone to misunderstanding. Like each juridical text it has clear and unclear points, but in all its vision is revolutionary.
I was a not surprised that the decision itself rised a whole host of comments, most of them were acute and interesting. In fact I was happily surprised that the
majority of the people reacted with positive comments on the commission’s decision, and the one that did not agree on the fines, agreed on the general

I could not help but to notice a rising portions of wails and rants from the dark that described the work of the commission as a fascism, an attack to US or (I
quote) “the last idea of justice from European crybabies”. With the exclusion of this kind of rudeness, that, thanks God, belongs to a marginal minority of
people, I was not surprised that a good portion of the surfer did not see what really the decision was about, seen the fact that being US citizens, they are not
accustomed with the law system that rules EU. I contacted thus Eugenia Loli-Queru and asked if she could be that kind to give my humble opinion a little space on
her web site and she gladly agreed, so here I am and I hope that I will not bore you too much. Let start.

Some premises are sometimes necessary…

This, sadly for the audience of OS news is NOT an entirely technical article, having to deal with law more than with technical issues. But fear not, because I
happen to be as much as geeky as it is permitted to a jurist and law scholar. I will divide this article in three parts, a legal introduction, the analysis of the
decision and finally the conclusions. Being those not easy matters, I expect some kind of feedback in the form of comments, that I will answer as appropriate on
the comment section of the site. If you really do not want to read what I’ve written under this lines, please feel free to go directly to the section “Returning
home” where everything has been recapped for your enjoyment. That said I think I will start.

The story so far

The decision of The UE commission starts for a plaint deposed by SUN microsystem in December 1998. Sun lamented that Microsoft refused to give information
about the interfaces that were necessary to the company to create programs that could dialog with the omnipresent Windows operating system.
The Commission started its enquiry, finding out that not only SUN had had those kind of problems. In fact they found out that this behavior was part of a more
complex and generalized strategy. So, after 5 year and half of work and three communications to Microsoft (1) the commission decided that:

-Microsoft is in a position of near monopoly with it’s huge customer number in the desktop market; near monopoly meaning that even if it has to fear the
concurrence from some other smaller companies, its power is that big that it does not fear to lose its monopolistic power on the market itself.

-Microsoft has abused of its position of monopoly creating dialogue protocols between server and client and then refused to reveal how those protocols worked,
creating a situation in which only time and retro engineering could permit to non Microsoft programs to work. Note well, I am speaking of the documentation on
the protocols, not on the API coding, more information on this later.

-Microsoft bundled its media player (from now on WMP) into Windows, creating a dangerous situation in which, by sheer number of WMP existing, other
competitors started in disadvantaged position in competing for the market of media resources and playback possibilities.

Now, before we continue, a bit of explanation is needed about the monopoly’s view of the commission. View that guided this decision. The commission noted
that Microsoft’s situation is that of a near monopoly , meaning that even if MS did not act as a full monopolist (well it actually did, but let go for now), the sheer
power of it’s market position forced other competitors out and did not offer space for other competitors to enter the market.


Easy enough, with that quantity of Desktop system installed it is easy to predict that the most part of people will use IE, outlook,WMP or other MS related
products in their daily life, meaning that companies that produced software of any kind had to confront themselves with the “Microsoft way of doing things”.
There wasn’t an express denial for customer to get other programs, but the commission argued that the choice was limited from the start, more on that later.
This consideration drove the following action that was to concentrate on two points, the multimedia capabilities of Windows, identified in its framework, which
WMP is only the tip of the iceberg, and its politic of denying the access to the protocols of dialogue between client and server that permits to applications to
work in the Windows system.

The truth to be told, companies had this problem from a few years, and had started with patience and will to build a set of tools to outflank Microsoft’s denial.
Proof it is the Samba suit for dialogue with non Windows machine (tool set that each user of Linux knows well). But the problem that the commission foretold was
that if Windows opened it’s way in the low server market (thing that the Redmond company was doing) the monopoly would have quickly spread even in this
growing section of the market. Thus the decision and here is how it works.

(1)A communication is a document, that indicates that an enquiry has started on you or your company. It is necessary that the act is known from the suspected
who’s under enquiry, because, in case it is proved in court that the communication wasn’t received at all, the entire enquiry is useless and has to be started over

The decision

The decision articulates on three points, all of them with more implications as it can first catch the eye, let’s see them together

The colour of money

613 millions of US dollars? Wooooh pal, take it easy! The amend that MS has to pay ranks to the top level of the fines ever commited by the commission, but
makes perfect sense in the frame of the antitrust laws of Europe. How is the calculation done? It depends on many factors too complicated (and boring) to recall
in this place at all.

In this particular case, it was calculated on the company’s year incoming , because antitrust law in Europe use this particular value to calculate all the fines.
The reasoning to this is quiet simple, if there is an income form an illegal concurrent practice (as the commission stated) it is pretty logical that the fine will
be calculated using that income as a parameter.

The highest limit is set to up the 10% of the years revenue of the company. In this particular case, it is around 1,6% of the annual income statement of Microsoft.
High? Well, it could have been worst, but fear not, money are not the main point here. Microsoft does have an annual income that is calculated on about 53
billions $ (source “The Economist”), so even if not a breeze, this money haul is something that MS can live with.

No, the real point about the fine is that if you’re fined you’re guilty of something and thus there is a precedent on which others can work. At the announcement
commissar Monti did say that they do not think that there would have been other plaints like this one, but I already have found out that Outlook express, IE and
another part of the API are being pointed at by three different companies in plaints that will be deposited shortly. If only the money interest you, be reassured
though. For my experience, the appeal court will probably drop the value from 30% to 50% making it more bearable.

Talking business

The second part of the decision regards the time limit of 120 days in which MS has to give away complete documentation regarding protocol of interoperability
and communications between the server’s interfaces of non Microsoft groups that permits to them to operate with the other side that is thought as being
composed by Windows operating server PCs. The documentation has to be updated regularly as the technology evolves; that to permit to competing companies to
adjust their softwares accordingly.

This part of decision rose the second best amount of moans and wails, why?

In part for a misunderstanding about the decision itself, that seemed at a first glance to ask for the opening of the code of the communications protocols API’s,
in part because it seemed that this revealing of information was made as a plain punitive measure more to wound MS than to restore the Law order.
Both assessments are wrong, because the measure have nothing to do with the API’s actual code but with the mere communication protocol. Let’s explain it in an
other way. There are two people that looks at a three, both of them are stranger to the other, let’s say that one is Japanese and the other is Arab. Both have two
sets of languages that roughly expresses the same concepts, in both of them there are the same concepts, but logically expressed with two different languages.

Now let’s say there is another person there that speaks Arab but does not speak Japanese. It goes per se that only the Arab could speak with him. Let’s also say
that both the Arab and the Japanese wants to tell to that person that there is a tree. In both language there is the word tree and the way to name it and describe
it, but if that person understands only the Arab, so the Arab just tells “look there is a tree” and the exchange of informations is done. Supposing the Japanese
wanted to do the same he could only try alternative ways of communicating the message; those methods are surely less direct that the base message, and will
surely take more time and work to be effective and transmit the information.

Translated to technical view it means that if you do not know the language mode, you’ll have to use alternative interfaces and retroengineering to put you
through your problem and this will take more time and be, surely, less effective. The commission has thus stated that those information permits to MS the
effective monopoly of the market, blocking the others competitors to effectively enter the market or get a fair share of it for their work.

Here is the first problem, how does the commission change this situation? The first idea could would have been to simply oblige MS to open the API’s code and
give them away free. This is plainly ridiculous, because, even if the monopolist, the intellectual property of MS has to be guarded as much as the other
competitors, so it would be impossible to ask them to do that, but infringing the UE law on intellectual property. The decision is simple, the only part that
Microsoft has to render open are the way the message exchange works.

Not the code, mind me, only the documentation that explains the logical operations that are behind the exchange scheme, permitting to everyone to understand
the mechanism and so to create an interface that works for both side, going back to my metaphor, giving the Arab grammar to the Japanese.

Now the second part of the problem, that roughly translates to “Hey, wait a second! I worked for it, do I have to give it free?” the answer is “Nope” the
commission states in the next paragraph that if the documentation involves technology that is covered by patent warranty on the EU territory, there will be a
meeting with Microsoft to decide an acceptable price for this piece of information. So MS has to sell it, thing that surely isn’t pleasurable, because it means the
end of one part of their market overhelming strenght, but the fact is that being the monopolist, they are treathed slightly differently from the other competitors.

One last clarification; many software houses like the creators of Samba objected that this would be unfair to the one that actually has gotten around the problem
with much work and will. I understand their problem, but this is a wrong conclusion based on two errors. The first one is that none is obliged to buy this piece of
information, because it is an expense and thus it cannot be forced on anyone. The second is that the commission did not say anything about retroengineering
and alternative ways of solving the problem, accepting the fact that companies had already dealt with the problem.

Long story short, you buy the grammar or you continue to use gestures, but the grammar may NOT be a secret.

Show must go on

And now comes the really big issue, the stripping down of windows from WMP. The howls of pain was heard to Europe and back “Why?! GOD WHY?!”. The answer
is, as usual, not easy. Let’s start by saying that the decision of stripping WMP from the core OS has some reasons to exist and it has to do with both the position
of MS in the market and on some basical mechanism of competition and software production. Let’s examine them one at time.

The commission noted that the WMP’s power was overwhelming in face off other player’s, like, let’s say, Real audio, or Quicktime, that still hold some kind of the
video and audio streaming market share, but surely more marginal than the overwhelming WMP. The commission stated that the WMP’s position was this strong
and was growing that stronger that it surely menaced to push out concurrence from the market and install an effective monopoly in the field of live multimedia

Why should one choose WMP? This is exactly the point of the commission. THEY DO NOT choose it, because WMP is automatically installed with the OS. This, far
from being a plus, it is a minus for the customer, because, even if not actually stopping the subject to use another player (paying or free) it impairs his real

Let’s explain this with another metaphor. Let’s say that you buy a house and as a plus the seller gives you a car with it. Nothing wrong with it at all.
Let’s say that this house looks like a fire fighter’s base and so you’d like your car to be red with chromed details. Said, done, you have your car, and each of the
new buyer of home from that house seller have this combo of themed house/car following their taste and wishes. Now the question is, if there was the possibility
to have another car, that answer your requests in a similar way, both in aesthetics and in mechanics, and let’s assume for the sake of the example that you even
could have it for free, would you get it? You already have one mind you, so you may be interested in another one only if the qualities of the latter car were
overwhelmingly better than the original car or met some specific desires and needs of you.

For a percentage of user the trouble of getting another car may be worth the try, but the legal assessment of the commission is that a large portion of the
average users wouldn’t be interested in another media player because they already have one that already does all the basic operations required and more, so, the
hassle of finding another one, downloading it or getting it from somewhere else, installing it, taking the risk that it may destroy some system’s unknown balance
may really not be worth the risk.

Worst than that the commission evidenced that WMP is the main troop of MS in the battle for media streaming. Media streaming technology that could bring, in
the near future, to the real possibility to just look at a movie or hear a complete concert live from your home on your desktop. So, that said, if WMP is bundled
with the OS and everything that was said before applies, why should Joe Average get another player? Look, we are speaking of WMP here, a program that, aside
from all considerations, is GOOD. I still believe there is better, but where else do you find a player that does live streaming, video playing, video and audio
encoding and CD ripping all in one combo and given free with the OS on top of that? Thus the commission decided that to re equilibrate things the WMP has to be
stripped out from the Windows OS within a period of 90 days. Microsoft has to offer the stripped version on a paritary level as the non stripped one, meaning
that it must be commercially valuable to offer it to customer (ie: cheaper or better packed or with lesser bug) and there must be a real interest in choosing the
stripped version instead of the classical one.

Mind that the decision, in reality, does not change immensely the way things are done; customers that buy a computer with preinstalled OS have just to specify if
they want or not the WMP in it, but if they choose to, the matter is settled. If they buy the computer without OS (or with OS bundled but not installed) they are
free to choose the Windows version with or without WMP. It’s just a matter of responsible choice.

Now let’s see why the decision of stripping the WMP from the OS.

As someone has evidenced, stripping down the WMP might not be the wisest thing to do, because it blocks some features that with XP has been offered to the
public, like the automatic preview of video files on thumbnail and the sound preview of audio on mouse pass. There are definite fears about the real possibility
of actually stripping the WMP out of the frame of Windows (possibility that MS denies from the beginning). The latter problem has been solved by Real, that in
front of Judges in November showed for testing a retroengineered version of Windows that offered Real player instead of WMP and WORKED.

The first problem is in reality a false problem, because the media system of Windows is only loosely bound to the media ability of the OS. Let’s put it that way.
You install an other player, like, let’s say, Bsplayer. Let’s say that you set the player as default player, and, finally, let’s say that you open a streaming WMA (which
is supported by Bsplayer), what happens? Simply that, if you have the basic installation without service pack of Windows, the OS uses the media player to play it,
even if the default player is another one. Two conclusion has to be taken from that fact.

-The first is that WMP is THE player and the matter is settled, thus the decision of the commission makes a perfect sense, because no matter what the customer
chooses, WMP will be used in the end.

-The second is that WMP has to be stripped off from the OS to permit real competition in the field of streaming media; why you say? Let’s put it this way: let’s
say that you are a webmaster of a site that offers live media of any kind you could like (let say porn, just to render my article less boring) and you have to
encode each months a fair amount of video for streaming.

You, being what Marx called a “good capitalist”, have interest in reaching the largest audience of customers possible, so you will encode in each media format
you can have notice off, so that each of the customer can be satisfied.

Logically the time at your disposition is not endless, thus you’ll have to encode in the more codecs possible that are the most popular around (even the good
capitalist has schedules, and encoding in “Uncle-Pino-media” just for the sake of the only customer that you have that uses that crappy player isn’t worth the

So tell me, with it’s 90% or so of audience in the WORLD having installed WMP, WHICH type of streaming protocol do you think our beloved webmaster will use?
Proof it is that I find less and less sites that uses Real or Quicktime in face of WMA and WMV. Unbundling the WMP is thus the perfect and logical solution to this
question, it is feasible and will permit a loophole for competitors that will compete in the market.

Logically it is not a simple answer, because I’m aware that there are libraries that lies dormant under the GUI of WMP and that ARE needed to make the media
part of Windows work.

Sure, but the problem is right there, standardization may be a good thing, it surely helps the customer as much as the programmer, but standardization is good
in the measure in which it is part of a collective agreement and not as part of a monopolistic imposition. Think to Direct-X. Every game uses Direct-X, because
they are the surest way to make the game work, but the fact it that they will work UNDER WINDOWS.

Sure, direct -X are standard, they are free and everyone may have them. Three cheers for them, but the fact is that they bind the game to the Windows
platform and if the producer had to write the game for another system, the first thing to do would be to strip out the Direct-X protocol. Same goes for Media
players, if I want a player to do the same as WMP, I do not have the choice but to use the limitations of Microsoft’s protocols, but hey, they are free aren’t they?
Well, an old Italian saying tells us that “The devil always wants his share” and you can well see where I’m heading here.

An acute remark was made to me about this decision and it stated that it would have been smarter to simply force MS to open the specs to everyone and this
would have really hit MS for good. No, sorry, it may seem so, but if you read till here (and I do not think, because bore has surely killed you on the road) you
understand very well that opening the specs would have fortified MS because in the end the protocols that would have been used are THEIRS!
That would have been the hit of the century, can you imagine it? EVERYTHING running on Windows protocols! I can hear Ballmer gurgling in pleasure…

Returning home

So here we are, a quick recap of the essential points of this decision may be well needed after this long exposition. If you came here directly from the title the
points may seem mere assumptions, thus I suggest you to read up here, anyway, here we go:

-Microsoft was fined for a sum of money that is surely important, but only if you do forget that we are speaking of a company that declares an annual income of
53 billion dollars. Relax, they’ll survive.

-Microsoft, following this decision has to give away, not later of 120 day, the DOCUMENTATION regarding the protocol of dialog between the client side and the
server side.

Furthermore, this is limited to the client side and no API code is asked at all. Top of that, this documentation has not to be given free, but has to be sold where
it regards technologies that are under the protection of the patent law of the UE. The documentation has to be brought up to date while the technology changes,
so to permit to competitors to be always in position to adapt their programs.

-Microsoft has to offer not later than 90 days from the decision a version of Windows that has been stripped down from it’s media player.
The two version may co-exist on the market, but the stripped down version has to be commercially interesting and not offered as a worst product (so that
customers do not think at it like a leftover).

Customers that buy a computer with pre-installed OS have to ask explicitly for the installation of WMP; if they buy a computer with no preinstalled or bundled OS,
they are free to choose wich copy of the OS they like to have.

-Microsoft was sentenced for abuse of it’s monopolistic dominant position, after 4 years enquire by the European commission lead by Mario Monti; an agreement
could not be found from both sides and MS has appealed to the Court of Justice in Louxembourg that will now decide.

Final statement

So, what remains to add? That it is surely a complex decision, built on a attentive and strict enquiry, that made large use of technical experts offered by both
parts and thus permitted to open an interesting window (pardon me the pun) on a problem that could really badly turn out as the final taking over by Microsoft of
the PC market.

Aside from the consideration about law men messing with things they (usually) do not really understand, re reading the commission’s enquiry acts the fact that
jumps the most at your eyes is the accurate study from the point of view of understanding the idea that was behind the technology. Technology, in whichever form
it appears in our lives, is surely one of the path of progress, but there cannot be any progress if you leave the field lawless and without regulation that permits to
re equilibrate the market.

It remains only to await patiently for the decision of the European Court of Justice and see what happens. As we use to say in Italy “Who’ll live, will see”. There is
some measure of wisdom in old saying…

About the author:
Gianluca Casu was appointed Law Doctor by the university of Pisa, law faculty, in the field of industrial and commercial rights. He is actually earning, in the
same university, a master degree in private companies and management of public companies right. He works as Artistic director for a renown press house in
Italy and is a dedicated geek. He has used a great number of OS’s in his life and comes a long way from the prehistory of computers (Rest in peace trusted C64).
He is actually trying to take over the world, but is poorly succeeding in the task.


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