[A2k] Financial Times leader: Microsoft mandate

[Thiru Balasubramaniam]

<SNIP>

The principles the Commission fought on - interoperability and no
extension of monopoly power into new markets - are good ones. The new
legal mandate, however, will work best if fear of it means that it need
not be enforced in court.


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Microsoft mandate

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

It was not quite Jarndyce v Jarndyce but it was close. Yesterday
Microsoft lost its appeal against a European Commission decision that
it had abused its dominant market position in a case that began nine
years ago. The Commission now has a mandate to tackle companies such as
Microsoft - but it should be wary of exercising that power. Rather than
going on a prosecutorial rampage it should try to find timely,
light-touch ways to regulate the fast-moving technology business.

The specifics of the case are as arcane as the legal proceedings and
manoeuvres in Charles Dickens' novel Bleak House. First, Microsoft's
integrated its Media Player with its Windows operating system, thereby
crushing streaming media software produced by rivals; and second,
Microsoft's refused to provide certain information on its server
software to competitors.

On both counts, the case itself must be judged a failure. Despite the
Commission's ruling, Windows Media Player dominates its market, and
though Microsoft was forced to provide a version of Windows without
Media Player it had little effect because there was no price difference
between the two. Microsoft's server software is also on its way to
dominance and it took years before the information requested was
disclosed. The record =80497m fine, meanwhile, was little more than a
rounding error for a company as successful as Microsoft.

The case achieved little because it took too long and because the
remedies were hard to enforce, but what it has done is establish a
clear legal basis for the Commission to regulate dominant technology
companies. As the jurisdiction with the strictest rules, it will now
lead the world in that role.

It should not do so by launching into more major antitrust enquiries.
To do so would encourage forum shopping, as rivals to Microsoft and
other leading technology companies rush to air their grievances, in
cases unlikely to achieve any better results than this one.

A better model is the way the Commission pushed Microsoft to change its
new Vista operating system prior to its release. It should be ready to
act pre-emptively when companies seek to bundle new products with an
existing monopoly. The appointment of a trustee to act as referee and
ensure fair play on issues of interoperability has also been a
qualified success.

The principles the Commission fought on - interoperability and no
extension of monopoly power into new markets - are good ones. The new
legal mandate, however, will work best if fear of it means that it need
not be enforced in court.



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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