The Latest EU Antics and Microsoft

by on May 8, 2007 · 6 comments

The EU continues to issue what one hopes are wild threats against Microsoft. Now EU antitrust authorities have revived the possibility of “structural remedies,” that is, breaking Microsoft up. This apparently because Microsoft is seen to be resisting compliance with earlier orders.

Interesting. What is the theory behind this? The focus of antitrust law is supposed to be consumer welfare (not, say, competitor welfare). So the earlier commission orders were supposed


to further consumer welfare. But now a different remedy is being considered. Is this because it would *better* further consumer welfare? No, apparently, it is because it is punitive.

It is doubtful that consumers’ interests would be furthered by a Microsoft breakup. Let us revisit the arguments that were made in the United States when restructuring was floated here. The sub-Microsofts (divided horizontally or vertically or what have you) might coordinate with one another and their products continue to interoperate, but more likely they would seek to differentiate themselves. Consumers stand to lose the benefits of backwards compatibility and interoperability that the market has gained from having Windows as a overwhelmingly popular platform. Continued interoperability is possible, of course, but the transaction costs inherent in achieving that would pile on, as the sub-Microsofts and developers vie to coordinate with one another.

And where would the EU’s beloved open source ventures be in all this? They might get a leg up. But more likely they would flounder in the turbulence as the proprietary firms jockeyed for position. How many platforms does the market have room for as it seeks to stabilize again? Anyone want to take bets? The EU regulators seem to be willing to bet–but then like regulators everywhere they are not betting their own wealth.

Every antitrust order–like regulation generally–suffers from being backwards-looking. It is based on developments over the past five or ten years, and in fast-changing tech markets is likely to be outdated even before the ink dries on the page. The more ambitious the order, the more foolish the authorities will look as the dislocation of resources they have wrought become apparent.

  • http://enigmafoundry.wordpress.com/ enigma_foundry

    By ‘structural remedies’ I strongly suspect they are refering to some mandatory licensing scheme for the code that windows uses to communicate over a network.

    Have you read any of Tridge’s testimony and statements?

    It seems to me that Microsoft has dug their own grave, by not producing the interoperbility/networking protocols used by windows.

    MS of course does not want to give everyone the wherewithal to interoperate with windows over a network, but that is what EU wanted.

    I speculate that the problem is that Microsoft did not want to co-operate, and could not, as the NSA backdoors would be rather easily exposed.

  • http://linuxworld.com/community/ Don Marti

    If you break up Microsoft, you’d probably get “Unix Wars” but with Windows. A bunch of companies, all supposedly selling interoperable stuff, but not really interoperating all that well. More workarounds needed, therefore a greater fraction of the total budget of future Microsoft-based IT projects would be spent on consultants in Europe, and less sent to the USA for licenses. Makes sense if you’re a Eurocrat looking to shift the balance of trade, doesn’t make sense if you’re a European IT customer.

    In this case, antitrust makes about as little sense as the two main “pro-trust” government intrusions affecting software: anticircumvention and patentability creep. The least harmful thing to do for the European market is keep those two out, and let reverse engineering and independent innovation handle the job of keeping vendors honest and customers happy.

  • http://enigmafoundry.wordpress.com eee_eff

    By ‘structural remedies’ I strongly suspect they are refering to some mandatory licensing scheme for the code that windows uses to communicate over a network.

    Have you read any of Tridge’s testimony and statements?

    It seems to me that Microsoft has dug their own grave, by not producing the interoperbility/networking protocols used by windows.

    MS of course does not want to give everyone the wherewithal to interoperate with windows over a network, but that is what EU wanted.

    I speculate that the problem is that Microsoft did not want to co-operate, and could not, as the NSA backdoors would be rather easily exposed.

  • http://linuxworld.com/community/ Don Marti

    If you break up Microsoft, you’d probably get “Unix Wars” but with Windows. A bunch of companies, all supposedly selling interoperable stuff, but not really interoperating all that well. More workarounds needed, therefore a greater fraction of the total budget of future Microsoft-based IT projects would be spent on consultants in Europe, and less sent to the USA for licenses. Makes sense if you’re a Eurocrat looking to shift the balance of trade, doesn’t make sense if you’re a European IT customer.

    In this case, antitrust makes about as little sense as the two main “pro-trust” government intrusions affecting software: anticircumvention and patentability creep. The least harmful thing to do for the European market is keep those two out, and let reverse engineering and independent innovation handle the job of keeping vendors honest and customers happy.

  • Walter E. Wallis

    I have proposed a law that would mandate any fines paid to Europe must come solely from European sales.

  • Walter E. Wallis

    I have proposed a law that would mandate any fines paid to Europe must come solely from European sales.

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