by Alex Levy | It’s déjà vu all over again.
The European Commission recently initiated an investigation into allegations of anticompetitive behavior, questionable deals, and underhanded tactics by Microsoft. In response, statements have plastered news coverage, gluing the attention of computer nerds everywhere to their television screens. Microsoft press managers have denied breaching European law, while grizzled Euro-crats have frothed diatribes promising corporate justice. Specifically, Microsoft has been issued a stiff fine and faces demands that it release specifications for part of Windows’ code. Casual observers might conclude that Microsoft is getting what it deserves, and that it may even change its business practices after this—but they’d be very wrong.
The European Commission penalized Microsoft €497 million, approximately $611 million. EC officials are reportedly high-fiving each other while industry spectators gawk at the situation’s lack of precedence; this is the largest fine the EC has ever levied against a single company. Less widely publicized is that Microsoft pulls in that much money almost every two weeks. For a company whose European business alone yields roughly $7 billion annually, a one-time fee of $600 million is a drop in the bucket.
Two issues lie at the heart of the EC’s accusations. One is Microsoft’s tight integration of Media Player into Windows, a situation similar to the bundling of Internet Explorer that spurred the US antitrust suit. The other is that Microsoft’s server software works better with Windows than competitors’ software. While these may sound like separate concerns, they both revolve around Application Program Interfaces: hidden programming interfaces in Windows, many of which only Microsoft knows how to use properly.
Will Microsoft yield to the EC and fork over the hefty fine? No—Microsoft is appealing the decision, which means several years of litigation, an interim in which enforcement of the EC’s ruling is stayed. By the time all appeals are finished, regardless of the outcome the computing world will likely have changed so drastically that bundling a movie player will be a non-issue. Internet Explorer was once a hotbed of controversy, and now it comfortably enjoys over 90% of the browser market share. There is every reason to believe that history will repeat itself.
Even if Microsoft is forced to unbundle Windows Media Player, this will not increase competition in the software market as the EC hopes. The problem is not which media player comes embedded with a Microsoft operating system, since computer users are capable of downloading and installing software. The problem is which media player operates best under Windows.
Windows Media Player, Internet Explorer, Office, and most of Microsoft’s other software packages all operate better under Windows than competing software because Microsoft exploits hidden tricks inside Windows. Competitors like IBM, Real Networks, and (until recently) Sun Microsystems complained that Microsoft hid this information, and the EC agrees: Microsoft has been given 120 days to open up more Windows APIs, but this will be put on hold once the appeals start.
APIs directly affect software bundling. Internet Explorer is the dominant web browser not only because it comes pre-installed with Windows, but because it is integrated into Windows at a level that no other browser can match. This integration is made possible by, again, programming interfaces: Internet Explorer shares proprietary code with Windows and vice versa, so that the two programs can cooperate effectively. The same applies for Media Player, MSN Messenger, and will undoubtedly apply to Microsoft’s next strategic software offerings: bundled virus scanners and bundled firewalls.
There are no technical obstacles to allowing all web browsers, instant messaging clients, and media players to integrate themselves into Windows. Integration itself is not antithetical to open competition; making the browser part of the desktop was an insightful way to innovate the user interface. Similarly, tying email, IM, media, and network security all closer to the Windows core is an excellent idea. However, the only programs which ever do get “tied in” are Microsoft’s programs, and therein lay unfair advantages.
If the EC were serious about forming a level playing field for computer software, they would demand that Microsoft make available more APIs and make changes to Windows that would allow users to pick which browser, which IM, and which media player they want integrated into their desktop. While the EC did demand open APIs for server products, this is a far cry from what is needed to truly reign in Microsoft’s anticompetitive behavior.
So Microsoft will appeal the decision, and in the end, will most likely only need to pay a multi-million dollar fine to settle the issue. Microsoft will be happy since any attempt at enforcing the EC’s decisions can be delayed to the point of irrelevance. The EC will likewise be happy, because they will have the opportunity to challenge American supremacy by fining one of its largest corporations. As for the rest of us, nobody should harbor any illusions: the EC verdict is little more than a money grab and a poke in the eye. Microsoft will continue to use its control of Windows as leverage to unseat rivals and erect unfair barriers to competition. And as long as the European Commission feels satisfied with their settlement, there’s not much anyone can do about it.
Mr. Levy is a senior majoring in Computer Science.
Comments