Mark Mardell's Euroblog

Microsoft loses

• Mark Mardell
• 17 Sep 07, 08:13 PM

Huge sighs of relief around the European Commission, as the judges in Luxembourg give an unexpectedly wholehearted and clear judgement against Microsoft.

If they had instead backed the company it would have left the commission’s reputation - or perhaps I mean self-image - as a champion of consumers and crusader for competition in tatters.

That would have been particularly galling in a week when President Jose Manuel Barroso is due to unveil the plan to break up big energy firms in Europe. On that front, the commission has had to compromise and it is expected their plan will to offer two options. One would be full unbundling, as it's called in the unlovely jargon. The second would be a compromise. It would mean that the monopoly would be broken up to an extent, still owned by the same company but operated by different people. Who presumably have to peer over Chinese walls and not talk to each other.

It's a case where the Germans and French, who prefer the latter, weaker choice are likely to win over the Brits and the Dutch, championing a more liberal market.

Microsoft’s home maybe the world’s biggest superpower but the USA doesn’t have politicians sitting around the table in the council and commission so it may lack the clout of Gaz de France or Germany’s E.On in this arena.

The commission is now looking forward to piling fines on Microsoft if it doesn’t hurry up and make sure its systems can talk to those of other companies. They are also looking at two new complaints against Microsoft Office and Microsoft Vista.

It’s always nice meeting someone who is obviously having a good day and Thomas Vinje was almost overflowing with joy when I met him earlier today. He’s a lawyer who’s been pursuing Microsoft for the last nine years and founded the European Committee for Interoperable Systems.

This quixotically named organisation is made up of companies who say their business has been damaged by Microsoft. The basic claim against Microsoft is that when you buy a PC or laptop with a Microsoft operating system you also get Windows media player and a whole lot of other things that allegedly mean those who invent rival software have no realistic chance of selling their product, even though it might be a lot better.

At this point I’m sure I can hear cries of “Buy an Apple then!” but Vinje seems as much concerned with the economic benefits of liberal competition than the real or imagined failings of Microsoft’s various products.

He says it is too late for rival media players to make any impact but not for new ideas still in production, like voice or handwriting recognition. He goes on to make an interesting claim.

If you are a young computer scientist and you come up with a bright new idea and you don’t have any money, you need independent financing and you have to go to a venture capitalist. And one of the top questions on a venture capitalist's list of issues today is, “Is there any chance Microsoft might bundle a similar product?” If your answer is “Yes, I might be standing in the way of Microsoft,” then you don’t get any money and the market is deprived of an innovation.

Will that change, I asked? “That depends if Microsoft complies with the principles of today’s decision.”

The commission will be watching...

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