Brussels, 21/04/2006 (Agence Europe) - As the examination of the Microsoft/European Commission affair by the Court of First Instance draws near (see related article), the American IT company fine-tunes its arguments - as do its opponents. On Thursday, during a conference on the more general implications of the Commission's decision of March 2004, several experts criticised the Commission's work, putting forward arguments to be developed in Luxembourg from 24 to 28 April. The seminar, organised in Brussels by the Centre for New Europe (CNE) think tank and by the Competitive Enterprise Institute based in Washington, spelled out the risks that the matter may entail for European innovation. Jointly funding the event, Microsoft was not represented directly and CNE President Mattias Bengtsson gave his assurance that he was “not there to defend the firm”, although he did consider the company had been treated “unfairly”.
“Reasonable people may reasonably disagree over this issue”, Dave Harfst of the law firm Covington & Burlington said, recalling that opinions differed considerably over the sale of the Windows operating system disassociated from Media Player, and over interoperability. Mr Harfst notes that the difference of opinions is still greater when it comes to the legal test that should apply to determine the satisfactory degree of interoperability. It is hardly likely that the hearings of the Court of First Instance will settle the matter, he said, considering that there is a contradiction between the aspiration to make Europe the most competitive knowledge-based economy in the world and the fact of diminishing the value of ideas. Like all those taking the floor, he considers the Microsoft case will have broader repercussions for the new technologies and may be a brake on innovation in Europe.
Stan Liebowitz, Professor for Economy at the University of Texas, believes the proceedings against Microsoft suffer from several shortcomings. First of all, it has not been proven that the inclusion of Media Player in the operating system prevents competition, he says, recalling that the PDF document format has imposed itself over the other DOC and MDI types without being included. According to the figures on the evolution of market shares between 2000 and 2002, only Real Player suffered losses, while the other systems (Winamp, Apple QT and MusicMatch) enjoyed profits, sometimes above those of Microsoft's Media Player, although not being installed on Windows, Mr Liebowitz also said. Also, the Commission's regular consultation of Microsoft competitors' opinions (including for assessment of commitments taken by Microsoft) is, he said, disputable, all the more as it is not certain that these rivals effectively act in favour of greater competition. Finally, he said, the dossier does not really show how this works to the disadvantage of consumers.
Paolo Zanetto of Instituto Bruno Leoni sees three reasons why this affair is a “dangerous precedent”: - the role played by Microsoft's rivals, attacks on intellectual property and constraints for innovation. Regarding the latter element, it would seem clear that any future innovation on the part of Microsoft should receive the Commission's endorsement before being marketed.
The compulsory licensing of new technologies is also a threat for innovation, making investment in this field more risky. Such a method indisputably promotes interoperability, as well as the reproduction of identical products to the detriment of the appearance of new products, said Jonathan Zuck, President of the Association for Competitive Technology, which represents over 3,000 companies in the information technology sector throughout the world.
More generally, this affair is like “a slow train crash”, Alan Riley, Professor of Law at the London City University, said ironically, stressing the tactical errors made by the Commission. While the outcome of the affair still seems uncertain, Mr Riley is surprised at the amount of the fine imposed on Microsoft. Even if the Commission's position were confirmed in substance, a reduction in the amount of the fine would attract public attention and public opinion would focus on this element, entailing a “public relations disaster”, he said. Although he recalls that the granting of licenses is possible in exceptional cases, there are considerable differences between the Commission's analysis and the caselaw on interoperability. After reading the March decision, he commented, “I am not sure” about the legal test employed and the “bland conclusion” reached by the Commission on this chapter of the matter.
Microsoft rivals believe Commission decision should be maintained
In a press release diffused on Friday, ECIS (European Committee for Interoperable Systems), an association including many of Microsoft's competitors such as IBM, RealNetworks, Red Hat or Sun Microsystems, adopts a totally different stance, defending the Commission's dossier, which is not alone in finding that Japan and South Korea and Microsoft are guilty of anti-competitive practices.
After five days of hearings, it is important to turn to basics, said Simon Awde, President of ECIS, expressing confidence in the outcome. He said the applicable law was clear and jurisprudence was well established. He said the facts were also very clear and all the procedures had been respected so there was no basis for overturning the Commission's decision. He argued that competition generated innovation, which in turn gave consumers a choice, so by preventing competition, Microsoft had directly damaged consumers.