Microsoft in Europe

The European Union (EU) has in the recent times taken a front seat in the regulation of the global technological industry, especially after the U.S Justice Department took a back seat in the investigation of antitrust cases. Over time, the squabbles between the EU and the software giant Microsoft has continued to make headlines. Microsoft boasts a 70% of the operating systems market with Windows owning over 90% of desktop operating systems and a whooping 97% of personal applications being captured by Microsoft Office.

This effectively makes Microsoft a likely subject of attacks, especially by its rivals. Microsoft’s main rivals such as Oracle, IBM, Nokia and the European Committee for Interoperable Systems (ECIS), which is a coalition of companies such as Adobe systems, RealNetworks, Sun Micro Systems, filed a complaint against the giant. They claimed that the new windows Vista version and Office 2007 would further the monopoly of Microsoft. Microsoft in their part insisted that there was nothing wrong with a monopolist improving on its products.

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The work of the commission was therefore to establish the truth as to whether the software giant had employed illegal business strategies. In the event that this was found to be true, then commission would have the jurisdiction to prevent future use of the said products.  The technology industry in Europe is directly governed by government regulation with the antitrust ruling against Microsoft back in 2004 capturing the attention of all players in the technology industry. The antitrust ruling was passed down by the Luxembourg Court of First Instance, which is the second highest court in Europe. This ruling was important as it influenced the future of technology sector antitrust policy, together with the legal and commercial strategy of U.S based software companies.

This particular case was a double edged sword as in the event that the Luxembourg court validated the EU’s antitrust decision, the software giant was bound to be scrutinized by governments allover the world. On the other hand, if the court ruled in the favor of Microsoft, then policymakers around the globe would have serious issues in managing and containing Microsoft’s ventures within their areas.

The troubles of Microsoft with European antitrust officials began back in 1998. Under the leadership of Mario Monti, the EU Competition Directorate gave an order to Microsoft to do away with the built in digital media player and to ensure that Windows servers and desktops were able to communicate with rival software products by exchanging of technical information. So, when the Microsoft rivals approached the EU this time round, they were skeptical on the effectiveness of any verdict, considering that the earlier attempt to curb the monopoly of the Microsoft media player had flopped. This was after the EU had demanded of Microsoft to sell the Windows operating system that was devoid of the Media player, but this did not happen and eventually, RealNetworks paid the highest price as they were rendered irrelevant in the media player market segment. However, when Microsoft negotiated several locally arranged private settlements with some of its arch rivals such as Time Warner, Novell, Sun Microsystems and even RealNetworks, the case against it was disadvantaged. This was the case as the earlier allegations that had been submitted to the commission by these rival companies were no longer applicable.

Basically, these rivals wanted the EU to ensure that the competition in the server markets was preserved and that the internet remained as an open communication forum as failure to do so would see the giant effectively monopolizing the world.  However, the EU was firm in its statement that they were not out to rob the intellectual property of Microsoft but was rather trying to ensure that the giant complied with certain regulations. Microsoft was rather diplomatic before the verdict, with the spokesman, Tom Brookes, claiming that the case was not an issue of winning or loosing but rather, an avenue through which clarification on some issues concerning the responsibilities of Microsoft were. He also said that this was a good forum for constructive interaction with other players within the industry with the aim of establishing productive co-existence opportunities.

The EU verdict saw the software giant being slapped with a whooping $613 million fine for abuse of its monopoly. This was a danger to Microsoft as it was limited in is future endeavors to maneuver innovatively in the ever changing software industry. Dispute the ruling, it merged that Microsoft was not adhering to the agreement as there were complaints to the EU by parties such as the Free Software Foundation – Europe, who were clear on not needing the Windows code but rather, to communicate with Windows. This thus meant that while Microsoft was insisting on maintaining a propriety advantage, the real losers were the clients who were unable to communicate. Consequently, a $390 penalty was added in July, 2006 as a result of the failure by Microsoft to share technical information that would enable effective data communication.

Business Week (2007). Microsoft in Europe: The Real Stakes. Retrieved form the  World Wide Web on the 11th June, 2008 from http://www.businessweek.com/globalbiz/content/sep2007/gb20070914_131373.htm

 

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