|
|
| Microsoft, antitrust and innovation, by Georg Greve |
 |
|
Thursday, September 27 2007 @ 07:57 AM EDT
|
Microsoft, antitrust and innovation
-- by Georg C. F. Greve
If one were to believe Microsoft, antitrust law is for
sore losers who are too lazy to innovate, and the decision
of the European Court of Justice against Microsoft was to the
detriment of consumers around the world. One might even believe that
any company with large enough market share would now have to fear the
wrath of the European Commission and its anti-innovation
bloodhounds.
At first the notion seemed ludicrous, but then more and more blogs
repeated it and serious media started picking it up. Even
representatives of the US government spoke out on behalf of Microsoft,
to the annoyance of Neelie Kroes, the European Union's antitrust commissioner.
When the European Court of
First Instance announced its decision, the first reaction of
Microsoft was to talk about compliance with the ruling and that it was
only partially confirmed by the court. Then people read the
decision.
There was only one modification to the Commission's case, relating to
the trustee provision. This was because the EC should not have asked
an independent third party selected from a list provided by Microsoft
to monitor compliance. It should have supervised this itself. In
essence the Commission was told they had been too forthcoming with
Microsoft. This was not a partial annulment by any means, it could
rather be seen as going beyond what the Commission had decided.
During the hearing, Microsoft had tried to attack the case on
procedural and administrative grounds, no matter how likely or
unlikely. None of this stuck, because the European Commission had done
its homework, and done an extraordinarily thorough, careful and
balanced investigation. It also showed extraordinary patience with
Microsoft's attempts to delay.
Declaring antitrust law to be "of the devil" and to distract from the
situation by pointing fingers at others was really the last available
option to distract from the facts of the case.
This allegation does not hold up to examination though. Allow me to
tell you why.
1st Fallacy: That the Ruling Punishes Innovation
The first fallacy was that this kind of ruling punished the
innovator. Who were the innovators? Real Inc. innovated the streaming
media market, and Novell was the innovator in the workgroup
server market. In both cases Microsoft unfairly leveraged its
desktop monopoly to drive the innovator out of the market. That is why
future innovators in Silicon Valley often do not receive venture
capital if they do not have defensive strategies against Microsoft or
at least a co-existence strategy. Quite often that strategy is to
become successful enough to become an attractive purchase for
Microsoft. Not much of a reward for innovation.
One of the functions of antitrust law is to create an environment that is
protective of the innovator. Microsoft has not been an innovator.
2nd Fallacy: That Google, Apple and All Successful Companies Need to Fear
The second claim, echoed widely by major media outfits, is that Google
and Apple should now be worried about similar lawsuits because of their
large market shares. But antitrust law is not about having large
market shares. Antitrust law says nothing about offering a product and
gaining monopolies. As long as there is no distortion of competition
in neighboring markets, this is legitimate.
What antitrust law cares about in this context is leveraging
monopolies of one market into another through abusive practices. The
Commission found Microsoft employing two abusive practices: bundling
and the deliberate obstruction of interoperability.
Horatio Gutierrez of Microsoft is
quoted asking "If Microsoft can't bundle an audio player with
Windows, why can Nokia bundle a camera with a phone?" -- the answer
seems obvious.
It is questionable whether Nokia has 95% market share in mobile
phones, but even if that were the case: There is currently no separate
market for mobile phone add-on cameras, so there is no neighboring
market to be be distorted by monopoly abuse.
If Nokia had 95% domination and if there were such a market, Nokia
might find itself in conflict with antitrust authorities if it took
active steps to ensure that a) all its phones always came with the
camera included and there is no way to buy the phone separately; b)
removal of the camera would be very difficult for a normal user and
potentially end up damaging the phone; c) the phone would be built in
ways to make sure cameras of other vendors would not work and it would
be impossible to buy both together.
Microsoft was found doing all of the above with its media player.
Interoperability:
The second abusive practice the Commission found Microsoft guilty of is the
deliberate obstruction of interoperability, generally achieved through
arbitrary and willful modification of Open Standards. This makes it
impossible for competitors to write interoperable software. This is to
the detriment of customers, who find themselves locked into the
products of one vendor, the antithesis of competition.
Microsoft is comparatively silent on this charge and for good reasons.
Vendor lock-in is precisely what public administrations around the
world are concerned about. It is a driving force behind the growing
momentum on Open Standards, and Microsoft's refusal to end the
obstruction might not go down too well.
It might look much worse in the light of public statements that
Microsoft will
not even commit to standards that it has proposed itself, such as
the recent Microsoft
OfficeOpenXML (OOXML) format it wants approved by ISO.
The less people talk about the interoperability side of the case, the
better for Microsoft. Otherwise people might connect MS-OOXML to the
fact that Microsoft initiated the standardisation effort in the
workgroup server area to open the market and later started
obstruction of interoperability on its own standard to drive the
innovator out of the market.
As long as other companies avoid these practices they will have
nothing to fear from the European Commission.
Despite what Microsoft and its partners would have you believe,
monopoly abuse is not good for you. It only benefits the monopolist at
the expense of competition, innovation and society at large. Antitrust
law was created to address this issue and to protect the interests of
society.
If a monopolist tells me that antitrust law harms innovation, I have
to clearly state that I am not convinced.
Neither should you be.
DISCLAIMER: The author is initiator and
president of the Free Software
Foundation Europe, a third party to the antitrust case in support
of the European Commission representing that is working jointly with the
Samba team to restore its ability
to write interoperable software on a level playing field.
|
|
|
|
| Authored by: Erwan on Thursday, September 27 2007 @ 08:10 AM EDT |
If any...
---
Erwan[ Reply to This | # ]
|
| |
| Authored by: DannyB on Thursday, September 27 2007 @ 08:11 AM EDT |
Please re-re-re-post all apology and mea cupla messages here to help keep them
organized so PJ can easily find them. :-)
---
The price of freedom is eternal litigation.[ Reply to This | # ]
|
| |
| Authored by: Erwan on Thursday, September 27 2007 @ 08:14 AM EDT |
Remember to use the preview button. Some also like clickies...
---
Erwan[ Reply to This | # ]
|
| |
| Authored by: tiger99 on Thursday, September 27 2007 @ 08:16 AM EDT |
[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 08:35 AM EDT |
Greve: "It is questionable whether Nokia has 95% market share in mobile
phones, "
In fact, Nokia's market share is only something like 35% - 38%, depending on who
you ask and when. It is the biggest player, but still a far cry from the market
share Microsoft has in its field.
[ Reply to This | # ]
|
| |
| Authored by: tyche on Thursday, September 27 2007 @ 08:35 AM EDT |
Clear - to the point - very descriptive of the situation.
Mr. Georg C. F. Greve is to be commended on how well organized this article is,
how well it describes the situation and the solutions provided by the E. U.
Commission and the Court of First Instance. Reading other reports and the
ruling of the Court of First Instance left me confused concerning the oversight
procedures, but this cleared it up remarkably well.
Thank you Mr. Greve for such a concise overview.
Craig
Tyche
---
"The Truth shall Make Ye Fret"
"TRUTH", Terry Pratchett[ Reply to This | # ]
|
- Agreed. - Authored by: Anonymous on Thursday, September 27 2007 @ 10:30 AM EDT
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 08:35 AM EDT |
| When I saw the title, and, in particular, Mr. Greve's 1st Fallacy, I was
immediately reminded of the AT&T monopoly, especially the part that Western
Electric played. A quick Google on ' "Western Electric" monopoly ' turned up
the following Wikipedia link:
L
ink
Us old guys remember the lack of choice in telephones and the
painfully slow -- even nonexistent -- rate of technological advance in them. In
a phrase -- NO INNOVATION. Why? Because it cuts into income (gotta do
research), among other reasons. Only with the breakup of AT&T, the forcible
separation of WE and the equally forcible imposition of competition did
innovation occur. I'm sure that the Groklawers can come up with other examples,
maybe starting with the Wright Brothers lock on aircraft design and the
technological deficit it caused in American aircraft development.
Perhaps a
thread can be started: Cases Where Monopoly or Near-Monopoly Stifled Innovation
Until the Monopoly was Broken.
msfisher @ work so not logged in. [ Reply to This | # ]
|
- When the Catholic Church had a monopoly on the scriptures - Authored by: Anonymous on Thursday, September 27 2007 @ 08:53 AM EDT
- Antitrust and innovation before MS - Authored by: Anonymous on Thursday, September 27 2007 @ 08:58 AM EDT
- Antitrust and innovation before MS - Authored by: JamesK on Thursday, September 27 2007 @ 10:09 AM EDT
- I'd rather see examples of monoplies leading to innovation...n/t - Authored by: Anonymous on Thursday, September 27 2007 @ 11:09 AM EDT
- Antitrust and innovation before MS - Authored by: Anonymous on Thursday, September 27 2007 @ 11:46 AM EDT
- Brothers Wright - Authored by: Anonymous on Thursday, September 27 2007 @ 10:04 PM EDT
- Hollywood eas created to thwart Edison's control of movies. - Authored by: Anonymous on Thursday, September 27 2007 @ 11:52 AM EDT
- Antitrust and innovation before MS - Authored by: johnfjarvis on Thursday, September 27 2007 @ 11:54 AM EDT
- AT&T And MS Cases Differ... - Authored by: lnuss on Thursday, September 27 2007 @ 12:03 PM EDT
- Antitrust and innovation before MS - Authored by: BassSinger on Thursday, September 27 2007 @ 12:42 PM EDT
- Monopoly case in point: The Trabant - Authored by: wood gnome on Thursday, September 27 2007 @ 12:47 PM EDT
| |
| Authored by: Stumbles on Thursday, September 27 2007 @ 08:56 AM EDT |
I think a better example could have been used to note Microsoft's efforts to
block any interoperability with their products by using the research the Samba
folks have found over the years. Especially with IIRC the massive protocol
changes Microsoft made between XP and Vista.
---
You can tuna piano but you can't tune a fish.[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 09:09 AM EDT |
Also, lets not forget Microsoft itself with the browser wars with Netscape. Once
it won that war, Netscape was all but dead and we were stuck with the security
hole ridden IE6 for a number of years with nothing to look forward to. The
internet in Microsofts eyes were a bunch of static pages and that was good
enough. Then came Firefox, giving the community and internet a chance to move
forward again and only then did Microsoft play catch-up and deliver IE7.
I also do not believe that Microsoft itself has ever really been innovative
about anything. I might get slammed for saying that, but I believe that they
have bought almost all their 'new ideas' and incorporated it into their own line
of produces[ Reply to This | # ]
|
- Economist article on EU's Microsoft ruling - Authored by: TedSwart on Thursday, September 27 2007 @ 09:22 AM EDT
- Microsoft, antitrust and innovation, by Georg Greve - Authored by: Anonymous on Thursday, September 27 2007 @ 09:37 AM EDT
- Microsoft innovations if any ... - Authored by: nsomos on Thursday, September 27 2007 @ 09:42 AM EDT
- Microsoft, antitrust and innovation, by Georg Greve - Authored by: Anonymous on Thursday, September 27 2007 @ 10:20 AM EDT
- Microsoft, antitrust and innovation, by Georg Greve - Authored by: JamesK on Thursday, September 27 2007 @ 10:23 AM EDT
- They DID TO innovate - Authored by: LocoYokel on Thursday, September 27 2007 @ 12:53 PM EDT
- Microsoft, antitrust and innovation, by Georg Greve - Authored by: Anonymous on Thursday, September 27 2007 @ 03:07 PM EDT
- IE6? - Authored by: filker0 on Thursday, September 27 2007 @ 04:02 PM EDT
- Products MS didn't buy, copy, steal or just improve slightly - Authored by: SteveRose on Friday, September 28 2007 @ 06:46 AM EDT
- Microsoft, antitrust and innovation, by Georg Greve - Authored by: stuart_b on Friday, September 28 2007 @ 07:26 PM EDT
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 09:22 AM EDT |
This is a bit of an editorial comment, but negations are complicated, so people
generally forget them. When dealing with spin fluff, it is generally
preferable to assert the opposite than to make a denial.
So if you want to be convincing and effective, you should probably change the
headings to be, "the ruling supports innovation and competition", and
"the ruling encourages successful companies like Google, and Apple",
or something similar, rather than what's written.[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 09:26 AM EDT |
| Would perhaps be a more succinct way of putting it. [ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 09:46 AM EDT |
I think, however that Microsoft is right about Apple, apple does abuse its ipod
marketshare, locking people into their itunes store and itunes ipod manager, and
they actually do it intentionally since they added that hash protection in the
latest ipods.[ Reply to This | # ]
|
- they didn't think of it first - Authored by: Stevieboy on Thursday, September 27 2007 @ 09:57 AM EDT
- Microsoft, antitrust and innovation, by Georg Greve - Authored by: Anonymous on Thursday, September 27 2007 @ 10:24 AM EDT
- Microsoft, antitrust and innovation, by Georg Greve - Authored by: JamesK on Thursday, September 27 2007 @ 10:28 AM EDT
- Microsoft, antitrust and innovation, by Georg Greve - Authored by: Pensacola Tiger on Thursday, September 27 2007 @ 11:34 AM EDT
| |
| Authored by: tknarr on Thursday, September 27 2007 @ 10:31 AM EDT |
One thing I note, in response to comments by the US DoJ:
Yes
anti-trust law protects competition, not competitors. But without competitors,
there is no competition. [ Reply to This | # ]
|
| |
| Authored by: boojumbunn on Thursday, September 27 2007 @ 10:45 AM EDT |
"It is questionable whether Nokia has 95% market share in mobile phones,
but even if that were the case: There is currently no separate market for mobile
phone add-on cameras, so there is no neighboring market to be be distorted by
monopoly abuse."
This, actually, doesn't support the argument (except that Nokia doesn't have
a 95% market share.) I say this because there USED to be an add on camera
market. There were companies that made compact flash camera's for use with Cell
Phones. They went away when phone manufacturers began including cameras inside
of their phones.
So honestly, this is an argument that Nokia (and other manufacturers) put an
end to a product by including it in their own platform... not that I don't
agree that Microsoft has abused it's position, but our arguments should support
our conclusions. ;)
Boojum the brown bunny[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 11:10 AM EDT |
Georg, thanks for the nice writeup. You're not alone with your
analysis.
The european think tank "Globalization Institute" has published
a paper "Unbundling Windows".
Windows’ dominant position both
has slowed technical improvements and has prevented new alternatives entering
from the marketplace.
tglx
[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 12:13 PM EDT |
I wonder why iPhone$ and iTune$ and MAc O$ X hasn't received the same attention
that M$ has received when it comes to the lack of interoperability?[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 01:15 PM EDT |
What the EU should enforce is untying of Windows from the PC hardware, not
banning of pre-installed Windows, which is what the Microsoft FUD machine is
trying to claim is being suggested.
The EU should enforce removal of the tying of pre-installed Windows to the
hardware. In other words:
1) The EU should declare that EULA conditions preventing OEM Windows from being
run on upgraded hardware, moved to another PC, or run under a virtualisation
technology on the same or different computer is illegal and therefore
unenforcable under EU law.
2) The EU should require that Microsoft cannot sell any version of Windows that
does not provide the technical means to do the things listed in 1) above - it
provide a set of install disks, don't block reinstallation or running as a
virtual machine by technical means such as product activation or breaking
Windows running as a virtual machine.
3) The EU should ensure that the same versions of Windows that are available
pre-installed, can be purchased separately from the hardware at the same price
as Microsoft receives from the OEM (or cheaper since it is without the OEM's 30
day support). This will prevent tying Windows to hardware purchase by
differential pricing of OS when it is not preinstalled.
4) Prevent Microsoft from applying discriminatory pricing or distribution
conditions that will discourage OEMs from offering PCs with Linux preinstalled
as standard with the option of later buying OEM Windows to run as a virtual
machine under Linux later, in the form of Windows install CDs, or virtual
machine image CDs or in downloadable form (eg. VMWare or KVM image, or RPM or
Debian package) available on a commercial Linux package repository or Ecommerce
site.
[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 03:07 PM EDT |
| Imagine that Google had 90% of the search market, rather than the 60% or so that
they have now.
Imagine that Google came out with their own OS, and sold
it.
Imagine that, when you requested a search using their OS, they put
something extra in the request so that they knew that it came from their
OS.
Imagine that they deliberately responded slower to requests that came
from Windows, and started advertising the fact that search was faster with
Google OS.
Then the EU has an antitrust case against Google. But it
takes more than just controlling a big chunk of the market. It takes abusing
your market position.
MSS2 [ Reply to This | # ]
|
- Imagine... - Authored by: zcat on Thursday, September 27 2007 @ 10:22 PM EDT
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 03:49 PM EDT |
If one were to believe Microsoft, antitrust law is for sore losers who are
too lazy to innovate
Unless, of course, it's Google whose actions are being considered in the light
of antitrust law. Then Microsoft wants antitrust law to be interpreted as
strictly as possible.[ Reply to This | # ]
|
| |
| Authored by: Anonymous on Thursday, September 27 2007 @ 04:09 PM EDT |
Watching TV this morning, CNBC I belive it was, something I think was called
Last Call, where they were talking about anti-trust action in regard to the
buyout of Ad Doubleclik by Google.
It seems Microsoft is complaining to the FTC, because Google's purchase of Ad
Doubleclick will give Google too much of a monopoly on the internet, over fifty
percent of internet advertising.
I kind of had to laugh, when you consider that MS has something like ninety
percent of the desktop market.
But if you look at the entire market of advertising, even one hundred percent of
the internet market is only a small percentage of the advertising market in
total.
Personally I don't think Google should be buying ad doubleclick because of
privacy issues, but it sure gripes me to be on the side of Microsoft for
anything, regardless of the reason. Besides MS, king of phone home software, is
not doing it for privacy concerns![ Reply to This | # ]
|
| |
| Authored by: SilverWave on Thursday, September 27 2007 @ 06:43 PM EDT |
This is a startling insight...
So MS lost on all counts
really...
The only reason the trustee provision to monitor compliance was
not allowed, is that it was a job that the commission should do its
self!
...relating to the trustee provision. This was because the EC
should not have asked an independent third party selected from a list provided
by Microsoft to monitor compliance. It should have supervised this itself.
In essence the Commission was told they had been too forthcoming with
Microsoft. This was not a partial annulment by any means, it could rather be
seen as going beyond what the Commission had decided. ---
Georg Greve
(FSFE):
A Screaming victory, I mean “Sometimes The Good Guys Do Win!”
Monday 17 Sept 2007 - STGGDW! ;-)
[ Reply to This | # ]
|
| |
| Authored by: stomfi on Thursday, September 27 2007 @ 09:52 PM EDT |
An excellent rational analysis, but will any of this counter the emotional
opinions from Microsoft and their supporters?
I was disheartened to see that Microsoft's mouthpiece say they would comply, but
they needed to speak to the commissioner to find out how.
As if they didn't already know. This is yet another delay tactic by Microsoft's
department of dirty tricks, and one can expect them to misunderstand the plain
English wording of the directives. as they have done many times in the past, and
only deliver a small unworkable part of their responsibilities, albeit with
10,000 pages of documentation.
I can only hope that the EU commissioner can effectively penalise them for the
delay and at the same time deliver a lot of punishing rational words to the
press, as I think bad publicity is the only way to counteract the emotional
machinations of Microsoft mentalities.
I for one, am constantly lobbying my local, state, and federal governments as
well as religious and not for profit care organizations on the ethical reasons
for not defaulting to Microsoft products. especially since there are viable
alternatives available that could invigorate the local industry.[ Reply to This | # ]
|
| |
| Authored by: insensitive clod on Friday, September 28 2007 @ 09:20 AM EDT |
There is no market for add-on cameras to phones. Now isn't that proof that
integrating phones with cameras effectively killed innovation? Wouldn't it make
sense that i could couple my 16Gigamegaturbopixel camera to my phone to send a
RAW image home?
It would depend on what you call innovation, is a single device that
simultaniously acts as your phone, your camera, your navigation system and a
monitor of you pulserate and bloodpressure an innovation, or would an open
platform that allows users to combine the best-of-breeds solutions together an
innovation?
---
Lemmings vs Penguins[ Reply to This | # ]
|
|
|
|
|
