MICROSOFT’S FATE: OUTSTANDING PERFORMANCE LEADS TO PUNISHMENT
Microsoft’s success created a forbidden dominant position
According to Mrs. Neelie Kroes, the European Union competition commissioner, Microsoft is abusing its dominant position because is is failing to comply with a three-year-old anti-trust ruling that it deliberately makes its Windows (now Vista) operating system incompatible with rival companies’ servers used to print and share files. The EU fined Microsoft a record €497m in its March 2004 ruling and a further €280.5m in July 2006 for failing to comply.
According to Microsoft, which appealed against both fines and the ruling, Mrs. Kroes is undermining its intellectual property rights.
On 17 September 2007, the Luxembourg-based Court of First Instance of the European Communities, essentially uphold the European Commission’s decision finding that Microsoft abused is dominant position. The Court of First Instance agreed with Mrs. Kroes that Microsoft was stifling competition by withholding certain technical specifications, or protocols, from its rivals. The Court of First Instance also agreed that the Commission wanted Microsoft to share only the system protocols, and not its source code. Also, the Court of First Instance upheld the decision of the European Commission that Microsoft was bundling two products together (the Windows operating system and Windows Media Player) as a means to lock out competition.
According to J. Nicholas Hoover of InformationWeek “The outcome of the case could influence the very nature of competition among the dominant players in the technology industry, forcing players like Intel, Apple, and others to share or open their technology to outsiders or refrain from certain competitive practices.”
The US government’s antitrust authorities take the position that the decision of the Court of First Instance chills innovation and discourages competition. Eventually, this will harm the consumers. According to Thomas O. Barnett, Assistant Attorney General for the Department’s Antitrust Division, the United States is concerned that the standard applied to unilateral conduct by the Court of First Instance, rather than helping consumers, may have the unfortunate consequence of harming consumers. “In the United States, the antitrust laws are enforced to protect consumers by protecting competition, not competitors. In the absence of demonstrable consumer harm, all companies, including dominant firms, are encouraged to compete vigorously. U.S. courts recognize the potential benefits to consumers when a company, including a dominant company, makes unilateral business decisions, for example to add features to its popular products or license its intellectual property to rivals, or to refuse to do so.”
The European Commission could learn something from the US antitrust approach!
Karel Frielink
Curacao-based Attorney (lawyer) / Partner
