Microsoft vs. European Union: Be careful what you wish for!
It looks like Microsoft finally got his come-uppance. On March 24, 2004, the European Commission issued its ruling on Microsoft. On the face of it, it appears much tougher and far-reaching that any of the US judgments. It seeks not only to redress past market dominance abuses but also to prevent their future occurrence. And it is accompanied by a very large fine, the largest in the illustrious history of EU antitrust.
Yet, appearances can be misleading. Although many a competitor welcome the decision as a victory for the consumer and a dawn of new era of innovation, a degree of cautiousness, even concern is warranted, even among those who share a dire opinion of Microsoft’s tactics.
Who stand to lose and to benefit from the Commission’s ruling? The effective impact of the ruling on Microsoft is uncertain. Even if Microsoft pays the fine, it will barely make a dent in its cash mountain of 50 billion dollars (and growing). Furthermore, as Microsoft will definitely appeal the ruling, its actual execution is at least few years away. By then, the substance of the ruling will have become largely irrelevant. As things stand, there is only one constituency which is absolutely positively set to gain from the Commission’s ruling and its long and tortuous aftermath: antitrust lawyers. For everybody else, in particular the consumers and potential new entrants, short-term and medium benefits are considerably less clear. Will the ruling lower the price of software? Will it accelerate the pace of innovation? The least that can be said is that answers to those questions are far from clear.
On the other hand, the ruling does raise a clear and present danger: of continuing and increasing and administrative interference in a critical economic sector. For those of us who live in Europe, this is nothing new: the European Commission already defines the shape and size of cucumber and the composition of chocolate bar.
Yet, the notion of the European Commission staff defining the degree of unbundling and the icon display on user desktop is deeply disturbing. It is not just a question of political preferences but of economic efficiency. Nobody has ever accused the Commission of being agile and nimble. “Slow-moving, lumbering, bumbling” are the adjectives that come to mind when describing Commission’s pace. As a rule, the Commission intervenes late and aims at wrong targets. This is already bad for the stable sectors such agriculture or steel industry but it would be positively lethal for rapidly evolving domains such information technology and the Internet. Do we want the European Commission to get involved in the search engines and mobile data protocols? The likely result of such involvement would be raising general costs of doing business and slowing the pace of innovation.
Proponents of Commission’s intervention got themselves a fool’s bargain: competitive barriers to entry will be replaced by regulatory hurdles. And the experience shows that it is easier to eliminate the former than the latter