The European Commission found in 2004 that Microsoft had
abused its market dominance by making it difficult for its products to interoperate
with those of its rivals. Specifically, Microsoft’s tying of the Windows Media
Player to the Windows operating system attracted the ire of the EU. The
Commission ordered Microsoft to offer a version of Windows without the Media
Player and also fined Microsoft $613 million. A European appeals court upheld
that decision on Monday.
The list of parties disappointed in the decision does not
begin and end with Microsoft, however. US lawmakers on both sides of the aisle
have come out in opposition of the ruling. Lawmakers contend that the ruling is
more economic protectionism than law and contend that the ruling is designed to
artificially reduce Microsoft’s legally-earned market power.
The US has shown a recent propensity to become more “hands
off” in IP and technology regulation. In addition to more stringent patent
standards recently provided by the Supreme Court, the US government has stepped
back from regulation such as its own antitrust suit against Microsoft in the
1990s. The EU, however, appears to be headed the other direction. The ruling
upholding the previous fines and injunctive relief is rather strong,
considering that the media player was substantially less of an antitrust
concern than the web browser wars.
Bottom Line: As
previously discussed, the software industry is one of the least likely to need
regulation, particularly given the current competitive environment. The EU may
get one “free pass” given that this was simply an affirmation of a previous
ruling. Looking forward, however, the EU would be wise to begin to follow the
United States’ lead in allowing free markets to handle the competitive balances
in the software industry.