Running Circles Around Anti-Trust

Wayne Crews

The slow-as-molasses Microsoft antitrust saga continues in Europe. After complaints first filed by competitors over five years ago, Microsoft was hit with the biggest fine in European antitrust history by the European Commission in 2004. The verdict on the company's appeal will be announced by the European Court of First Instance on Monday (September 17).

The authorities commanded that Microsoft supply consumers with two versions of Windows—one with, one without Media Player, plus instructed the company to grant server software rivals access to certain Windows operating system code so they can "compete."

A newer complaint is that the company charges too much for the server interoperability information it's being forced to supply.

Presumably Microsoft, as the Geico commercial jokes, continues to push other companies around, steal their lunch money, and give them wedgies.

Around the time the fine was imposed, Microsoft had a lead in the server market but no projected monopoly. Turning Microsoft into yet another "open source" option like its Linux and Unix rivals via compulsory license to what the company regards as it trade secrets represents a decrease, not an increase, in competition. Real competition would allow both proprietary and open source business models to coexist without interference.

The European Commission's questioning of Microsoft's freely "bundling" Media Player with the Windows operating system was dubious from the beginning. The only "barrier" to rivals like RealPlayer and Apple's QuickTime is downloading them, just as a routine update of Media Player itself requires a simple download. Other alternatives range from the popular MusicMatch jukebox acquired by Yahoo to versatile online storage lockers like Obtaining rival services today requires not a trip to the store, but a mere download or URL.

If Brussels believes the technology marketplace cannot discipline itself and that micromanagement and penalties—even possible corporate breakup—qualify as sensible public policy, then no intervention is off limits for any competitor. In March 2006, Apple received the "Microsoft" treatment in France, where legislation sought to mandate that music acquired from the iTunes store play on devices other than the iPod.

It's a familiar story; subjecting Europe's technology sector to political predation via aggressive antitrust regulation and involuntary licensing is less about protecting consumers than about competitors' regarding themselves as entitled to someone else's customers. Antitrust regulation protects politically connected competitors, not mom-and- pop operations, and certainly not the competitive process. Even Google sought to prevent Microsoft from embedding a search box within the new Internet Explorer browser that would default to Microsoft's own search service.

But the "Wintel" computing paradigm is increasingly disciplined by legitimate competition from rivals like Google's own Web-based services. Ours is a highly mobile world already impatient with "yesterday's" desktop PC, without directives from Brussels.

Indeed, the battles among hand-held devices like Blackberries, iPods, iPhones, Palms and smarter cell phones, are where the real action lies. The videophone seems to actually be around the corner; we get our news and e-mail; listen to music and watch videos, TV and movie clips; and generally stay fully connected with an even Wider World Web without Microsoft Windows. The future's so bright, we gotta wear shades, as the song says. That ought to mean something to global antitrust regulators.

Today's reality is that the world fundamentally does not need PCs running Windows to access the Internet's bounty. Microsoft confronts that reality in its consumer and server markets. There's no need to artificially hobble it.

Microsoft, and the superstars to follow, may grow large under capitalism, but never as large as the capital markets and the opposing business interests that desire to crush them. Indeed, like Microsoft, most technology firms "bundle," give products away free, favor some partners over others, place limits on software use and intellectual property—and seek to "crush" competitors in order to grow. Consumers benefit all the while.

Competitive discipline will prove superior to the political variety. Antitrust activism will hobble tomorrow's technology sector, painting a bulls-eye on the back of competitors that rise above the fray. The very complaints lodged against Microsoft now can, are, and will be easily lodged—inappropriately—against competitors' offerings, like Google search and the iPod. This politicized environment benefits no one.

Wayne Crews, Vice President for Policy and Director of Technology Studies, Competitive Enterprise Institute
Copyright 2007. All Rights Reserved.

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