The EU case has been a drag on Microsoft as a business. Not nearly as much of a break as the consent decree that managed to slow down IBM (by fundamentally changing its culture through an Orwellian language prescription) back in the day, but a significant impact on the company’s ability to think straight, for sure. How many senior executive cycles have been burned grinding teeth and bashing heads on tables in frustration? So much wasted energy… So much talent and so many dollars focused on trying to win a case.
With all that mind, you’d think that losing the appeal to the European Court of First Instance would all be bad for Microsoft. Not necessarily – in financial and business terms a lot of the downside is already “priced into” the model.
That is, as long as the EU doesn’t go on in a holy war without working out what winning the case actually means. Has it been a good use of EU resources fighting this pitched battle in the courts? No more appeals from Microsoft hopefully means we can all move on.
I had a really interesting conversation with Erich Andersen, VP & Associate General Counsel, Microsoft EMEA, just a couple of weeks that turned my thinking around somewhat. It seems there has been something of a sea-change at Microsoft about monopoly law in general and the right to bundle in particular.
Lets remember Microsoft recently threw in its own complaint against Google monopoly power – pure hypocrisy, or a function of a changed opinion? The truth is somewhere in between.
Over the years I have sparred repeatedly with Microsoft about the EU case, mostly with a smart and uber combative lawyer called Horatio Gutierrez. He never gave any quarter. I never asked for any. But happily we managed to make the relationship one of mutual respect rather than animosity.
I have strongly argued, for example, that the EU’s case against Microsoft is not just a European attempt to stifle US business. But a question Horatio once asked kept coming back to me.
“If Microsoft can’t bundle an audio player with Windows, why can Nokia bundle a camera with a phone?”
Whatever way I thought about it – that question plagued me. What the hell is the principle involved? Its not just a blunt market share concentration question (Herfindall-Hirschman Index). Its not just a benefits to customers question. So what’s the principle?
Really- there is no clear set of principles to govern technology bundling, at the EU or the DoJ, which makes life hard for companies and regulators. I got the impression Microsoft would actually like to work with the EU to provide a set of useful usable principles in this area. And you know who will be in the firing line if these principles are in place… other major vendors such as Google, Apple and Qualcomm.
I try and work on the basis of principle rather than bias, and the antitrust case has challenged this.
Am I arguing that Microsoft is now all sweetness and light, and won’t be “evil”? Not at all – legally Microsoft only has one responsibility: to shareholders. And just as it uses patent law, standards, copyright, DRM, and trade secrets as weapons – antitrust could become part of the competitive arsenal.
disclosure: Microsoft is a client.