[A2k] Financial Times (Lex): Microsoft ruling

[Thiru Balasubramaniam]

Microsoft ruling

Published: September 18 2007 03:00 | Last updated: September 18 2007
03:00

Ouch. Microsoft's bruising nine-year battle with the European
Commission has ended in stinging defeat. The Court of First Instance
ruled firmly against the software giant's legal appeals and backed the
Commission on every issue of substance. There seems little point in
Microsoft taking the main elements of its case any further.

What does the defeat mean? First, the Commission has emerged with
strong precedents, when it comes to dominant technology companies, on
the key issues of interoperability and bundling of new products. That
is likely to mean more pressure on Microsoft itself. The Commission
will continue to push for Microsoft to ensure interoperability for
rival server products with its Windows operating system. It might also
be emboldened to pursue more vigorously a complaint from rivals about
Microsoft's dominant - and highly lucrative - Office software.

More broadly, though, the ruling appears to cement the Commission's
position as regulator-in-chief of the global technology industry. It
has taken a more combative approach than US regulators in recent years.
The European market is so important - technology companies clearly have
to do business there. And the global nature of the industry means
decisions in Europe have ramifications for products around the world.

A rather strange situation is developing. Europe, with a few notable
exceptions, has failed to produce serious competitors to America's
technology giants. Instead it has become a check on the dominance of US
companies as a regulatory jurisdiction.

A transatlantic gap has developed between regulators when it comes to
enforcement and philosophy. That could change under a new US
administration. But for now, technology giants with strong market
positions (such as Apple with iTunes/iPod) or those pursuing
controversial deals (such as Google/DoubleClick) may fear an emboldened
Brussels regulator far more than the authorities in Washington.

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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@keionline.org