Business News

Created by Bizseller4u

Thursday, April 27, 2006


What's all this about?
Microsoft has abused its virtual monopoly in the computer world to muscle out smaller rivals, especially those that make media players and software for servers - at least that's the finding of the European Commission's competition watchdog.
Back in 2004, the commission fined Microsoft 497m euros (£343m, $615m) and forced it to offer a version of its Windows operating system without Microsoft's own media player.
The company was also told to give rivals more information about how Windows works, so they can make their own software integrate better with the operating system that runs some 90% of the world's computers.
But it's not just money and Microsoft's reputation that are at stake.
For the Commission this is the granddaddy of all anti-trust cases.
The EU's competition watchdog has suffered a string of defeats in court recently. If it loses the Microsoft case, its credibility could be undermined for good.
Wait, wasn't this about more than just media players and servers?
Microsoft and the European Commission are quarrelling over two separate cases. The charges now discussed in court were first brought many years ago.
But in February this year, a number of Microsoft rivals - Oracle, Sun Microsystems, Nokia and IBM among them - complained to the European Commission that Bill Gates' company was dragging its heels over sharing its software code.
If they are not told in more detail how Windows works, they argue, it is impossible for them to compete with their own software.
At the end of March the Commission held the first in a series of hearings in that new case.
What does Microsoft have to say for itself?
The company strongly denies the charges brought by the European Commission.
Just because a company is big and successful, says Microsoft, it should not have to share all its secrets and innovations with rivals.
The company says it has followed all the rules, and that the commission has "erred" in applying them.
If the Commission succeeds, says Microsoft, consumers would suffer, because there would be fewer incentives to innovate.
Furthermore consumers demand "bundled" solutions - all-inclusive software packages that feature basic things like media players - says Microsoft, and don't want the pain of having to download or buy everything separately.
So when will we get a verdict?
Not for a long time.
The arguments from Microsoft and the Commission will be heard by a 13-judge court, which has set aside a whole week for the case.
The diaries have also been cleared for Saturday, just in case the hearings overrun.
But don't expect a quick ruling. Experts say a verdict will come towards the end of the year at the earliest, and may well have to wait until 2007.
Haven't the Americans got it in for Microsoft as well?
Yes, they have. Or at least they had.
Six years ago a US Federal judge ruled that Microsoft had abused its market dominance and should be broken up.
Microsoft appealed and much of the original ruling and sentence were thrown out - but the company was still found guilty of monopolistic behaviour.
For now the US authorities are not on Microsoft's back.
However they have started asking questions about the scope of the company's new operating system, Vista, which is due to be rolled out from later this year.
Ah, the much-delayed Windows Vista. What's the problem here?
It could be the return of the son of court cases past.
"Bundling" is yet again the issue. As Microsoft develops and improves its software, it adds more and more features.
Fine for the consumer, but a pain or even devastating for rivals that specialise in filling the niches not yet occupied by Microsoft.
Giving developers of rival products enough information on how Vista works will be another issue.
Sure, Microsoft's behaviour is probably not that much different from that of other commercial software developers, say Apple, SAP or Oracle.
But unlike its rivals Microsoft dominates its market.
If you have a virtual monopoly, you also have special obligations, at least that's the view of competition watchdogs.

  • Buy and sell small businesses worldwide