It's long. But it's worth it. -- Allen Brown abrown at peak.org http://brown.armoredpenguin.com/~abrown/ A "gaffe" occurs not when a politician lies, but when he tells the truth. --- Michael Kinsley
> Last night, after everyone was gone for the weekend, Microsoft > announced that the European Commission had hit the company with a > statement of objections regarding its practice of bundling Internet > Explorer with Windows. > <http://www.microsoft.com/presspass/press/2009/jan09/01-16statement.mspx>. > A couple of hours ago, the Commission issued a confirming press > release. > <http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/09/15&format=HTML&aged=0&language=EN&guiLanguage=en>. > > I'd suggest taking some of the reports with a grain of salt. E.g., the > New York Times and the Washington Post have both just issued articles > claiming that the Commission ordered Microsoft to unbundle MSIE and > Windows throughout the E.U. > <http://www.nytimes.com/2009/01/17/technology/companies/17soft.html?_r=1&ref=technology>. > <http://www.washingtonpost.com/wp-dyn/content/article/2009/01/16/AR2009011604570.html?hpid=sec-tech>. > The problem is that neither attributed any source for that information > other than the two press releases, which do not state what remedy the > Commission's statement of objections specifies. > > The original complaint was filed by Opera in January of 2008, > alleging, according to the Commission, that Microsoft had: > > "... engaged in illegal tying of its Internet Explorer product to its > dominant Windows operating system. The complaint alleges that there is > ongoing competitive harm from Microsoft's practices, in particular in > view of new proprietary technologies that Microsoft has allegedly > introduced in its browser that would reduce compatibility with open > internet standards, and therefore hinder competition. In addition, > allegations of tying of other separate software products by Microsoft, > including desktop search and Windows Live have been brought to the > Commission's attention. The Commission's investigation will therefore > focus on allegations that a range of products have been unlawfully > tied to sales of Microsoft's dominant operating system." > > <http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/19&format=HTML&aged=0&language=EN&guiLanguage=en>. > > Opera had originally requested that the Commission *either* order the > unbundling of MSIE from Windows or to require the company to bundle > competing browsers with Windows. The press releases are silent as to > what remedy the Commission is ordering, so one has to wonder whether > the Post and the Times have read more into the press releases than > they state. > > The cursory press releases do not discuss the proprietary extensions > and undermining of open web standards issues, nor the issues involving > the tying of desktop search and Windows Live to Windows. A further > complaint by the European Committee for Interoperable Systems ("ECIS") > --- largely an IBM front organization --- reported in the last linked > press release involves allegations that Microsoft undermined open > standards through, inter alia, withholding the specs for the MS Office > binary file formats, pushing OOXML to compete with the existing > OpenDocument international standard, and withholding the > communications protocols for its software stack that connect MS Office > to the company's new office productivity fortress under construction > on the server side, e.g., Sharepoint Server. That investigation later > expanded to encompass allegations that Microsoft had packed national > standardization bodies to get OOXML approved by ISO/IEC. > > The ECIS investigation is still under way. It is conceivable to me > that the Opera complaint regarding the undermining of open web > standards has been rolled into that investigation rather than being > handled in the investigation whose preliminary result was just > announced. There is overlapping subject matter. I should also mention > that in European Comission parlance, an "investigation" has a sense > not commonly associated with investigations by U.S. government > agencies; an "investigation" is more equivalent to a U.S. Federal > Trade Commission administrative prosecution of antitrust charges, > whose final decisions can be reviewed by a federal court of appeals. > In this instance, the "investigation" involved is an administrative > prosecution by the Director General of the Commission's Competition > Directorate, herself a member of the Commission. The "statement of > objections" just issued represents the Commission's proposed final > position, with the burden now shifting to Microsoft to persuade the > Commission that it has erred in the statement of objections. In other > words, Microsoft has one last chance to assist the Commission's > lawyers in refining the quality of the final decision. :-) Microsoft > has eight weeks to respond and can request an oral hearing. > > Microsoft is in a largely untenable position because of its previous > behavior. DG Competition ruled against Microsoft in 2004 in regard to > disclosure of the Windows < > Windows Server communications protocols > and the company's bundling of Windows Media Player. Microsoft was hit > with a whopping fine and ordered to go forth and sin no more "with > similar object or effect." The company's 1-way definition of > interoperability was rejected and it was also ordered to disclose the > communications protocols with a degree of specificity sufficient to > place competitors on an "equal footing" in regard to the quality of > 2-way interoperability Microsoft achieved with its own software. In > regard to WMP, Microsoft was ordered to market a version of Windows in > Europe that did not include WMP, what I dubbed the "Windows Unmedia > Edition." > > Microsoft responded with what I can most charitably describe as > arrogance. Microsoft appealed and requested that the Court of First > Instance stay the Commission's order pending appeal. That request was > denied. The Windows Unmedia Edition was duly trotted out but Microsoft > sold it at the same price as the version of XP that included WMP. > There were audible rumblings of discontent from DG Competition staff > over Microsoft taking advantage of a loophole left in the order. > Microsoft added fuel to the fire by stalling the required > communications protocol disclosures and charging rather outrageous > fees for them. This resulted in a further, larger fine for what would > be analogous in the U.S. to as contempt of court. > > Meanwhile Microsoft continued down the path of extending its existing > monopolies into new areas via software bundling practices and > inadequate disclosure of the interop interfaces for its software. In > simpler terms, one might say that Microsoft's managers made the > mistake of flipping off DG Competition, betting the company's business > plan on a reversal or substantial weakening of the DG Competition 2004 > order in the Court of First Instance. > > Big mistake. Very big mistake. Humongously huge mistake. On September > 17, 2007 all 13 judges of the Court of First Instance issued a joint > decision that was instantly recognized as a landmark in the law > governing software interoperability. > <http://curia.europa.eu/jurisp/cgi-bin/gettext.pl?where=&lang=en&num=79929082T19040201&doc=T&ouvert=T&seance=ARRET>. > Microsoft won only a trivial collateral issue. The DG Competition > Order was otherwise upheld. I will always remember the shocked look > on the face of Brad Smith, Microsoft's chief in-house legal counsel, > in a press conference an hour after the decision was released. The man > was rocked to his very core. > > The problem Microsoft faced was that it had built a solid track record > that the fines and remedial orders issued by DG Competition were > inadequate to coerce compliance. And DG Competition has the power even > to break up companies when other remedial orders are inadequate. > > So the company since then has been very responsive to every twitch of > DG Competition staff's eyebrows. Many of the disclosures sought > through the ECIS complaint have already been made, with DG Competition > expressing approval for Microsoft's words when it announced the > disclosures but with a stern reminder that the Commission expects > more than the right words coming from the Microsoft press office and a > reminder that the new disclosures were irrelevant to the issue of > whether Microsoft had committed past violations. The survival of the > company in its present form is potentially at stake. > > There are also some incentives at work in the E.U. that don't come > into play in the U.S. Microsoft is a U.S. company, not European albeit > that it operates through a subsidiary in the E.U. The E.U. has no > incentive to continue to export its regional wealth to Redmond, > Washington. And the Commission has found a huge E.U. government > money-maker in prosecuting Microsoft for antitrust violations. So > further Microsoft antitrust violations in the E.U. have somewhat of a > "make my day" quality for DG Competition staff. Their return on > invested staff time and resources is enormous. > > Because Microsoft transformed itself into the goose that lays the > golden eggs for E.U. government, I do not expect DG Competition to > break up the company absent truly outrageous and recalcitrant > behavior. But I also do not expect DG Competition to issue orders as > ineffective in restoring competition as the Windows Media Player > aspects of the 2004 order. > > All of which boils down to saying that it's too soon to tell from the > outside what Microsoft has been ordered to do. > > Because the news was only disclosed Friday night after everyone had > gone home, I do not expect much in the way of clarification before > Monday. Even then, it's apt to come in dribs and drabs and largely by > inference from small details rather than all at once. E.g., the > statement of objections that led to the 2004 order was never leaked > and E.U. government differs substantially from U.S. government in > regard to transparency. But Microsoft knows what the order says as > does Opera. There may be details that leak. > > I apologize for the length of this missive, but this could potentially > be another decision that makes the ground move beneath our feet. If > Microsoft has in fact been ordered to unbundle MSIE from Windows, that > plays havoc with Microsoft's current business plan for monopolizing > the enterprise collaboration market. And if the company has been > ordered to stop undermining open web standards with proprietary > specifications, the company's "embrace, extend, and extinguish" > strategy could be near its end. So I think the topic deserving of a > lengthy post. > > We live in an interesting Time. > > Best regards, > > Paul > > > > -- > Universal Interoperability Council > <http:www.universal-interop-council.org> > _______________________________________________ > EUGLUG mailing list > [email protected] > http://www.euglug.org/mailman/listinfo/euglug > _______________________________________________ EUGLUG mailing list [email protected] http://www.euglug.org/mailman/listinfo/euglug
