Microsoft Antitrust Ruling: Why it Matters

So the European Union came down on Microsoft after the U.S. Department of Justice backed off. An appeals court ruled today against Microsoft's appeal of an earlier decision that found the software giant's practices illegally anticompetitive. In particular, the EU courts criticized Microsoft's bundling of Windows Media Player with the operating system, edging out vendors of standalone players.

That bundling practice is not new -- Windows has bloated in the 22 (!) years since its release, and not just with new, more sophisticated code, but also with applications and functions that were previously marketed separately by multiple other vendors. Sure, you can still (and often should) buy a separate firewall, antivirus program, browser, music player or other app now bundled with Windows, but many users will just stick with what came for free (and Microsoft knows it, and so do its competitors). Microsoft's reply to its bundling practice is that these apps belong in the OS, but Windows shipped without them for many years.

Smaller software vendors have complained for years -- carefully, since Microsoft is often also a partner -- but the software graveyard is brimming casualties of this bundling, too (Netscape, as a prime example).

What happens next? Microsoft is regrouping and reconsidering; it will be awhile before it actually has to pony up the $600 million in fines and fees. Does this affect North American users?

Sure. For one thing, the U.S. is still periodically reviewing Microsoft's compliance with the DOJ consent decree settlement reached in 2002 (the original ruling that Microsoft abused its monopoly status came down in 2000). Regulators here are likely to scrutinize the European activity.

But more than that, if Microsoft is coaxed to "unbundled" more applications from some versions of Windows, it's not only European users who may be buying it. Microsoft may try to charge the same for the app-accompanied versions, but EU courts won't likely permit that. It's easier than ever to shop globally, so Microsoft may need to reassess its U.S. packaging as well.

The Microsoft antitrust case has been unfolding for more than a decade. It's almost trite to exclaim how the cyberworld has changed, but it's striking -- emergence of the Web, Netscape out, Google in -- and still the Microsoft antitrust case wears on. A business generation ago, IBM basically wore out the DOJ's antitrust investigators in a similar case that dragged on for years; the Microsoft saga still has a lot of pages left to fill. The concept behind these antitrust laws is to protect consumers; do you feel better served?

Comments

Microsoft is only doing what the consumer wants. If the product was that bad, then why would so many people buy it? Everyone still has the opportunity to purchase separate programs as the article implies. The 3rd party companies just need to make their product worth purchasing. Why hurt the consumer with now having to purchase all of these products?

I feel that these antitrust law that they are trying to enforce, better serves the other companies, not the consumer.

arauch

September 17, 2007

1:22 PM PT