The European Union, Microsoft and Antitrust

If the competition commissioner weren't so bureaucratically solemn, you could call the entire affair Monti's Flying Circus. The Full Monti is more like it, with Europe's trustbusters exposing their smallness to the general public. It isn't just misguided antitrust policy; it's a monumental waste of time and resources.

This ruling does little to help European consumers, the supposed beneficiaries of EU antitrust efforts. It's hard to see, for instance, how forcing Microsoft to remove its multimedia software from the Windows OS without cutting the price of that scaled-back version serves Windows customers. As for making Microsoft disclose its Windows server APIs: The U.S. Justice Department ruling a year and a half ago set stringent requirements for how Microsoft is to share such documentation. Why lay down two sets of rules--simply because rivals want to slow Microsoft down at every turn?

Microsoft says it offered to ship competitors' media players. But those settlement talks broke down, Monti maintains, over the vendor's refusal to agree to "clear principles for future conduct," as if the ever-changing software sector can be mapped out in clear five-year plans. So Microsoft will appeal the EU ruling, and the status quo will prevail as the case lingers in the courts for several more years--nothing accomplished in close to a decade of posturing.

You have to wonder whether the commission intends to subject Europe's few remaining technology titans to the same scrutiny. Would SAP be forced to withhold certain CRM or supply-chain extensions from its market-leading business application suite should Siebel or i2 complain about the German developer's dominance? And what about future Windows features? Would Microsoft's addition of antivirus or search functionality also be deemed verboten? If so, who would make that call: the United States, Europe or both?

Meantime, the EU is behind the times--18 months behind U.S. regulators and at least a year behind market developments. Its crackdown on Microsoft's Windows dominance comes as Linux is taking off across Europe. More than 160,000 Linux servers were shipped in Western Europe last year, according to IDC, which forecasts that volume to triple by 2007. Some of Europe's most prominent multinational companies are moving key applications to Linux, while European governments are standardizing on the operating system. IDC also sees Linux gaining ground on the desktop in Europe, with 15.5 percent of companies surveyed considering using the platform. Meantime, this month's landmark deal between Microsoft and Sun Microsystems, under which the two companies agreed to share technical information to make it easier for Sun servers to interoperate with Windows, shows that customer pressure is the best way to get Microsoft to open up.