When the EU Court of First Instance announced its verdict on September 17, upholding the EU Commission's findings that Microsoft abused its market dominance, the media flocked to the lawyers representing the various parties for reactions to the ruling, Brad Smith for Microsoft, Carlo Piana for FSFE and Samba, and Thomas Vinje, who represented ECIS, the European Committee for Interoperable Systems. You can see both Smith and Vinje in this YouTube video from EUX.TV, for example.
Mr. Vinje was gracious enough to sit down with our own Sean Daly for an interview about the case, the decision, its implications, the history, and what it means going forward. I was particularly interested in his comments forcefully explaining how in his view the decision in no way impacts on Apple, Google or any company but Microsoft:
This decision is based upon facts where you have a single company which has a 95% market share which has lasted for a long time -- and that's very significant in antitrust law, the durability of the monopoly -- and it is a platform monopoly that is very, very powerfully protected by strong network effects in the form of an intense applications barrier to entry.
Now, those circumstances apply, I would suggest, to only one company in the world.
And the reasoning of both the Commission's and the Court's decision is limited to *those* set of facts....I was speaking yesterday evening with the number 2 executive in a rather significant American software company, and she had been approached the evening before yesterday by a relatively senior Microsoft executive suggesting that US technology companies should get together and oppose this European court decision in some fashion, because it was so terribly troublesome for US industry, and her reaction was, "Well, you know, when I get a 95% market share, I'm going to start to worry." And you know, she's exactly right....Microsoft got slammed. And they got appropriately slammed. And they're trying to figure a way out of this. They're trying to figure a way to get the world to think there's some sort of problem here for anyone else than Microsoft. And so they're conjuring up images of the European Commission going on a rampage against American technology companies. That is, to put it rather nicely, a mirage.
I also found his remarks about MS OOXML of interest (he believes it should not become an ISO standard), as well as the information about the complaint ECIS has filed with the EU Commission regarding Vista. Personally, I found his reaction to the ruling and how it was written fascinating, as well as his opinion that Microsoft would be well advised not to appeal:
So I think the chances on appeal are very close to zero, if not zero. So if I were Microsoft, I'd think the only thing that's going to happen to me is that I'm going to get slammed not only by the second highest court in Europe, but by the highest court in Europe. So -- at least I wouldn't do that. But we'll see. Microsoft always appeals, so we'll see.
Mr. Vinje mentions some emails that were removed from the case when RealNetworks settled with Microsoft, emails that he says were made available in the Comes v. Microsoft litigation. So Sean searched that collection that we preserved from the Comes plaintiff's website, and he found three emails related to RealNetworks. While we can't guarantee that these are the ones referred to, I believe they are at least representative. ("Embrace and extend. Announce vaporware, raise the bar. That's the quickest thing we can do.")
This is a significant event in history, and part of Groklaw's role is to preserve the history of important legal events of interest to the FOSS community. While interviewees can express themselves as they wish so as to present a complete picture for historians, I want to remind you that Groklaw has a comments policy. From Groklaw's earliest days, we've followed a policy of complete political neutrality, and it's worked very well for us to be the Switzerland of the Internet, you might say, and I believe that keeping politics out of the discussions has enhanced our ability to work smoothly together on the issues that we share an interest in without distractions. So please help keep it that way. Thank you.
Oh, I almost forgot. Mr. Vinje at one early point in his professional career worked for Morrison & Foerster. Small world. Here is the audio of the interview as Ogg, or as MP3, if you prefer. Enjoy.
An Interview with Thomas Vinje by Sean Daly,
conducted at the offices of Clifford Chance, Brussels, September 19, 2007
Q: All right, I'm sitting here with Thomas Vinje who represents ECIS, the European Committee for Interoperable Systems, is that it?
Thomas Vinje: That's it.
Q: And we very much appreciate that you could sit down and speak with us a little bit about these issues.
Thomas Vinje: I'm very happy to do so.
Q: Perhaps you could tell me a little bit about ECIS and what your role is?
Thomas Vinje: Well, ECIS was actually founded at Bull headquarters in Paris on Avenue Malakoff in September 1989, and it was founded, initially, to lobby on the interoperability provisions of the then-proposed EC Software Copyright Directive. The provisions on reverse engineering, and the scope of protection for interfaces under copyright.
And a fairly large group of companies got together, Bull being of course among them, and Olivetti, and Unisys, NCR, Fujitsu, Amdahl, eventually Sun Microsystems, Apricot and Amstrad in the UK, eventually quite a large number of companies who were interested basically on the open systems side -- this was before Linux was really known, and all of that -- but these were, you know, proprietary software and hardware companies, but ones who were very interested in open systems. Some of them, for example Bull, NCR, Olivetti, were extremely interested in IBM-PC compatibility, so they were very interested in insuring that they would have the ability, or that others would have the ability, to reverse-engineer the IBM-PC ROM BIOS and to provide specifications for a compatible BIOS or to actually write and then sell to them for inclusion in their PCs, a compatible ROM BIOS. That was one of the key issues driving that.
So, and Fujitsu and Amdahl were concerned about IBM mainframe compatibility, mainframe operating system compatibility. Different companies had different concerns. And there were some user groups involved as well at that stage, especially from the UK. So it began as a very sort of loose affiliation to lobby on the software copyright directive, and we fought very hard against, at that time especially IBM, and BSA [the Business Software Alliance], and of course Microsoft, so it's rather ironic that IBM today is one of the leading members of ECIS (laughter). It joined an association that was founded essentially to fight it, which we take as a great compliment, I must say. And it shows that anyone can finally learn -- (laughter)
Q: Yes, there's still hope... (laughter)
Thomas Vinje: That's not meant as a criticism of IBM. But it is interesting. People can evolve, and so ...
Q: So interoperability has been your bread and butter for quite a long time now.
Thomas Vinje: Interoperability, my personal bread and butter -- indeed, it's been pretty much my bread and butter since I began practicing as a lawyer in 1985, because the first -- I spent nine months working as a lawyer in Honolulu and I'm still a member of the Hawaii bar, which I'm proud of. But I only lasted nine months in Hawaii at a law firm, and then I joined Morrison & Foerster in San Francisco. And the first thing I worked on in San Francisco, and the main thing I worked on for five years there, was the Fujitsu-IBM software copyright arbitration, as a member of the team representing Fujitsu. So, the same sorts of issues that are involved in the Microsoft case here today were essentially involved in that IBM-Fujitsu dispute back in 1985. So, indeed, for 22 years now (laughter) I've been dealing with these issues.
That all happened by accident, but it's somehow become my life story, at least my professional life story. So ECIS was -- you know, that was a very, very hard fight against extremely well-resourced adversaries. But eventually, we did rather well. There was a compromise, but we were rather happy with the ultimate result on interoperability in the software copyright directive. ECIS was incorporated as a Belgian international nonprofit association in '91-'92 and has been involved ever since then in all of the EU and World Intellectual Property Organization legislative initiatives and treaties concerning intellectual property that have any relationship to competition in the IT sector and in particular interoperability.
We were involved in the Magill case, intervening on behalf of the Commission in the very, very early '90s. So we have been, as ECIS, involved in competition matters for quite some time, but the main focus of the organization for quite some years was on the policy front with respect to IP, proposed IP legislation.
And then, the CCIA, the Computer and Communications Industry Association, intervened in the Commission administrative proceedings, the Commission case against Microsoft, the one that was addressed by the CFI on Monday, just this past Monday, the 17th of September, and the CCIA -- now, it must be going on three years ago, entered into a settlement agreement with Microsoft whereby Microsoft paid some 20-some million dollars to CCIA -- I believe it was that amount, I'm not sure exactly what it was -- and CCIA agreed to withdraw from the proceedings. So that left rather a vacuum in terms of industry support for the Commission, and so it was basically decided that ECIS would have to step up to the plate and fill that vacuum.
So ECIS then intervened -- and the SIIA [Software Information Industry Association], which had been involved as an intervener for quite some time, became quite considerably more active, I think also as a result of the CCIA exiting the scene. So I represented the CCIA while it was involved. I had nothing to do with the settlement. It came as a surprise to me, but it is what it is, and so I've represented both the SIIA and ECIS in the Commission proceedings and in the court proceedings in the CFI.
Q: I see.
Thomas Vinje: I began as a member of the Hawaii bar, and then became a member of the California bar, and now I've become an English solicitor. So I have to represent these companies in, using my robes as an English solicitor.
Q: Yes, well, you must have a closet with several robes -- (laughter)
Thomas Vinje: We don't need them in California, and in Hawaii I wore an aloha shirt (laughter).
Q: OK, let's talk about Monday's ruling, the Court of First Instance, two days ago. It was quite a thick ruling; I took the liberty of measuring it; it was 621 grams [1 lb 6 oz., ndlr] by weight. (laughter)
Thomas Vinje: Indeed, I have it here with me, and it's rather heavy.
Q: It's rather heavy, and well, of course in Luxembourg when we spoke two days ago it was the initial reaction. You've surely had at least a few more hours to look at it since then. Do you find anything that changes your initial reaction, any clauses or any parts that you feel would be of concern?
Thomas Vinje: Well, there's nothing in it that concerns me. I think that as I was sitting in the car riding back to Brussels not very long after the Court issued the judgement and not very long after I spoke with you in Luxembourg, as I got into it, some tens of pages, I think I read about the first 110 pages on the ride back to Brussels, and the thing that struck me -- very powerfully, actually -- was how comprehensive it is, how detailed it is, and how extraordinarily well and solidly reasoned it is. Because, to be very frank, and I have to apologize in advance to those who work in the European courts in Luxembourg, I typically don't find their judgments to be particularly coherent... (laughter) which I think results probably from lots of things which is not really their fault, of having people, including judges, having to work in a language which is not really that familiar to them, and the fact that there are no dissents and no concurring opinions, so everybody has to basically agree on a single decision, and all that. This decision actually reads like it was written by a single person. It doesn't look like it's the product of a committee. I'm sure you know very well what I mean --
Q: Well, I know very well.
Thomas Vinje: You've probably participated in the drafting of many committee documents. (laughter) This doesn't look like that at all. This looks much more like a US Supreme Court decision and that is -- and US Supreme Court judgments are of course drafted having to obtain agreement from a bunch of people, but -- it's very, very well written, clearly reasoned. And another thing: the thing that struck me is -- I wasn't surprised; I was very happy by the result as we heard it in Luxembourg -- but when I spoke with you in Luxembourg, I didn't know anything about the reasoning. All I knew was that the Commission had won on both of the key issues, the bundling and the interoperability issues. And the thing that surprised me as I read it was how the Commission won, how we won. Because it's such a solid, comprehensive, stunning victory, in terms of how the decision is formulated.
I mean, it was really quite an experience, because I've been encountering all these arguments -- and there are a lot of them -- by Microsoft now, for years. And to see the second highest court in Europe go through each of them, in 248 pages, in great detail, and to -- in a very coherent, very persuasive way, to just reject roundly each of them was one of the more gratifying things I've ever experienced (laughter). I must say it really -- after having seen these arguments and having been frustrated by them for years, to see now the second highest court in Europe, to see that they saw through those arguments, to see that they saw the reality --
The Commission, of course, had seen it before, but to be frank, and I apologize to my friends in the Commission who I admire deeply for having persevered in this case, the Court decision is considerably better written than the Commission decision (laughter).
So it was, the thing that's changed since last we spoke is the realization of how we won, not the fact that we won. In terms of specific passages, I don't find any of them troublesome, I don't find any of them particularly surprising. I do reach one conclusion -- well, I've reached a number of conclusions, but one important conclusion is that before I read this judgment, I had assumed all along that if Microsoft lost anything, it would appeal. And after having read this, I'm not so sure. Indeed, if I were their lawyer, I would very strongly advise them against appealing, because the Court has, in a very solid way, approached its judgment by giving due deference to the Commission and to its margin of discretion in complex technical and economic matters, but nonetheless, it's gone through each of the issues, very, as I said before, very comprehensively, very persuasively, very clearly, and so it's established a very solid factual basis for the decision. And the European Court of Justice, the highest court, cannot disturb the factual conclusions of the Court of First Instance. It doesn't have -- that's not within its competence to address factual issues, it can address only points of law.
Q: Yes, that was the importance of this ruling.
Thomas Vinje: Yeah. And the reason why I would find it extremely difficult to appeal this with any serious chance of success is that the Court of First Instance has applied the law to the facts in a way that is completely consistent with the existing case law. And so it wouldn't be possible for Microsoft to argue that there is anything adventurous in here, or indeed anything particularly new with respect to the basic principles of law. What the Court has just done is to apply those existing principles to the facts of this case by comprehensively addressing the facts of this case and then putting them into the existing boxes, the existing legal principles.
So I think the chances on appeal are very close to zero, if not zero. So if I were Microsoft, I'd think the only thing that's going to happen to me is that I'm going to get slammed not only by the second highest court in Europe, but by the highest court in Europe. So -- at least I wouldn't do that (laughter). But we'll see. Microsoft always appeals, so we'll see.
Q: Well, let's look at it a different way. Let's say that I like to drive my car very quickly, and I get pulled over and I get a ticket, and I go down to see the judge, and the judge, you know, tells me that I have to drive slower, and I say "Well, yes, of course I'm going to drive slower," and I pay the fine, and I go back out, and the next morning I'm out speeding again. I think you understand what I'm saying.
Thomas Vinje: I understand perfectly, unfortunately. (laughter)
Q: What Microsoft, for example -- I mean, to amuse myself, I dug out a news story from two and a half years ago, which followed a previous ruling from the Court of First Instance when Microsoft asked for a suspension of the remedies of the original [Monti 2004] decision, and Microsoft announced at that time that they would immediately begin complying with the Commission's decision and that they would create, for example, a website for sharing communications protocols with their rivals, and two and a half years later, the Samba Team, in particular, is still waiting for it.
Thomas Vinje: Yeah, Microsoft said it would take them -- they told the Court it would take them two or three weeks to produce the documentation.
Q: And my understanding from the ruling is that Microsoft now has 120 days to provide the documentation, is that so?
Thomas Vinje: Well, actually, what the Court's ruling does is it just confirms the Commission's decision, and the Commission's decision gave it 120 days, so I think that 120 days has passed quite a long, long time ago. So, the moment has already arrived for Microsoft to comply. And indeed, I think your analogy is unfortunately an extremely apt one, because what we have seen is -- well, we saw the Commission issue the decision in March 2004; as you said, Microsoft asked the Court of First Instance to suspend the application of the Commission's decision pending its appeal. The Court said "No", it said "Comply now," and then we're, what, three years later, it's now September 2007, and it was just December 2004 when the Court said "No, comply now", and there's no compliance. And there's no compliance in at least three different ways.
One is, of course, with respect to the adequacy and completeness of the documentation, and the Commission had to fine Microsoft last year 280-some million euros, if I remember correctly --
Q: Yes, there was a sum per day, for every day of noncompliance.
Thomas Vinje: Yes, a million and a half euros per day, if I remember correctly. Well, that hasn't worked. There has been improvement; with the involvement of the [Monitoring] Trustee, Neil Barrett, there has been substantial improvement. And none of the companies that are members of the associations that I represent have seen the documentation very recently. So it might very well have improved further in the last few months. So I'm not in a position as I sit here right now to say absolutely, "It's not compliant, it's not adequate and complete", because we haven't seen it that recently.
But in any event, it certainly -- it should have taken the two or three weeks that Microsoft told the Court it would take, rather than three years. And I do genuinely believe -- there's no way for me to know it, of course -- but I genuinely believe, and clearly the Commission believes, that Microsoft has purposefully been delaying the provision of the documentation, adequate and complete documentation. And obviously, they gain significantly in the market, their market shares continue to rise as long as they refuse to provide or fail to provide adequate and complete documentation.
Q: In the workgroup server market.
Thomas Vinje: In the workgroup server market. Then there are two other ways -- but you might want to ask questions -- but that's one way in which they haven't complied and have been fined. There are two other ways they are not complying.
Q: Well, why -- please ... (laughter)
Thomas Vinje: I'm sorry, I realize I'm just talking at great length here (laughter). Well, the second way is by insisting upon charging utterly unreasonable fees for access to and use of the documentation, the technical documentation for interoperability.
Q: Members of the Samba Team told me that they were specifically designed to exclude themselves.
Thomas Vinje: Yes, and that also relates to the third way. And let me just get immediately to that, and then perhaps loop back to the second way. The third way is that Microsoft, by virtue of a number of things, including in particular things embodied in the terms and conditions of their proposed license, Microsoft excludes the implementation of these protocols in open source products.
And I would imagine that most of your readers and listeners are well aware that if competition is going to be restored to the workgroup server operating system market, if those market share lines are going to start changing direction, then it's open source products, and in particular Linux, that are going to do it. So I think Microsoft knows very well that if the information is not made available for implementation in open source products, the Commission's decision will remain as it is today, in this context, meaningless.
So they know they can defeat, they can defeat the meaningfulness of the decision and they can prevent any adverse consequences for them in the market, and they can essentially continue to reap the benefits of their behavior that's been deemed illegal by the second highest court in Europe by continuing to refuse to make the information available for implementation in open source products.
Maybe I can go back to the second one. And I think these are interrelated, and to some extent there's a tactic, I believe, of delay here. You know, Microsoft managed to put off the Commission's decision for six years. The case was initiated by a complaint from Sun in 1998 and it was only decided in March 2004. Now, certainly not all of that delay was due to things Microsoft did; the Commission had a steep learning curve and it's very very resource-constrained -- I think people don't know that there were basically four people working on this case, you know, against a very large army on the other side, of lawyers, economists, and God-knows-what, but Microsoft did do quite a number of things to delay.
It insisted, and correctly insisted, on its procedural rights at every stage, and the Commission was very careful always to give Microsoft all the benefits of its procedural rights, and it is very, very significant that Microsoft raised no procedural arguments in its appeal. It didn't claim in any way to have been denied its procedural rights, its due process. And that's very important and very unusual. You don't see many appeals from the Commission decisions to Luxembourg that don't include procedural arguments of that nature.
So the Commission was very, very careful. They knew the kind of adversary they were facing, they knew they just couldn't leave themselves open to procedural claims, and they succeeded in that. And that's something really quite admirable, I must say. But it takes time. If you're going to do things that carefully, it takes time.
So we had six years until the decision was issued, and now we've had a further three years, over three years, of noncompliance, and so, you know, the case started in 1998, we're now in 2007, and the market shares of Microsoft have dramatically risen, like to the tune of 40-some percent probably during that period of time -- 40 percent increase -- and, well, it's obvious what the corresponding numbers are for the competition, the competitors (laughter).
So, by virtue of delaying things, you know, what happens in the market and who benefits and who loses from it, I think ultimately, consumers lose from the lack of competition and all the good things that flow from competition.
So, I would suspect -- again, I don't have any internal e-mail communications or the like from Microsoft, so I have to simply say that I believe it to be the case that Microsoft has taken a conscious decision to delay implementation of the remedies and thereby gain in the marketplace by virtue of that.
So to come back to the second -- I think there are these three related tactics to frustrate the effectiveness of the decision, and in any event, by pursuing each of these three related strategies, tactics, to frustrate the meaningfulness of the decision, and by pursuing these sort of seriatim, to delay it to the point where if it is finally implemented, it will be implemented at the point where Microsoft has gained such an overwhelming market share that even by Linux, competition can't be restored and the game is over.
Q: Well, we can just look at what happened to the streaming media player market.
Thomas Vinje: Yeah, it's over, yeah.
Q: Now, you mentioned two days ago, and so did Neelie Kroes, the EC Competition Commissioner, that this was a victory for consumers. Microsoft and its supporters have characterized it more like a victory for the competitors of Microsoft. Can you tell me a little bit your vision of how you see consumers benefiting from this change?
Thomas Vinje: Sure, and you know, it's true that competitors will, if the decision is implemented, benefit from this decision. That's absolutely true. (laughter) I guess I would say "So what?" (laughter) But let me explain that, because I don't mean to be facetious. I think it's probably obvious to readers and listeners why that is the case, but I certainly have a fundamental belief in the benefits of competition for consumers. Let's just start with that very basic proposition.
I think it's true in virtually every industry, but especially true in the IT sector, that innovation flows mainly from competition. And I think we've seen, especially in the case of Microsoft, if you look at browsers, for example, when competition is extinguished, innovation is also extinguished. It ceases. I don't need to explain to you or I think anybody else why that's the case. Competition keeps people on their toes, it incentivizes them to move forward and to innovate. Now, sometimes innovations need to be appropriately protected by intellectual property rights, and I'd be happy to discuss the implications of this decision for intellectual property rights, and I think there are no adverse implications for the holders of intellectual property, and the Court quite explicitly, and I think quite correctly, said that it did not regard its decision in any way as limiting the incentives for innovation.
But to come back to the point. Competition benefits consumers insofar as innovation flows from competition, better quality products generally flow from competition, lower prices flow from competition. The things that matter to consumers, the things that benefit consumers, come from competition. When I was a teenager, I traveled in Eastern Europe and Russia, and I saw what a lack of competition meant. You know, when I was standing in the bank in Prague waiting for hours for my tickets for buying gasoline, that was one very concrete example of the consequences of a lack of competition and all of that.
Q: I understand that perfectly. In 1991, I was in St. Petersburg, and I was on a very, very, very long line for what turned out to be a fairly atrocious piece of chicken.
Thomas Vinje: Yes, I've had some --
Q: And this was the only place where one could buy any food for perhaps a mile in every direction.
Thomas Vinje: Yep. If there had been a bunch of those places, it would have been much better chicken at least (laughter). So consumers benefit from competition. With respect to both of the sides of this case -- the bundling side of the case, as you said, and as the Court found, Microsoft, by virtue of bundling Windows Media Player with its monopoly PC client operating system, extinguished competition in the media streaming market. It has eliminated the pioneer in the market, RealNetworks, as a truly effective competitor. Real is still there, it's a valiant company, I have huge respect for it, but you just can't continue to invest and innovate and do all the things you need to do in the market if Microsoft bundles its products.
And so competition has been eliminated in that area. And consumers, I think, suffer from that.
With respect to interoperability, we discussed before what's happened with the market shares, and today, if you're a business, if you're a university, if you're a government, and you wish to purchase workgroup server operating systems, you really don't have a viable choice. Because more and more, as time goes by and Microsoft creates more and more privileged, undisclosed connections between its monopoly PC operating systems and its server operating systems, it's not possible for competing server operating systems to interoperate properly with the Microsoft desktops and the Microsoft servers.
Now, that means consumers don't really have a choice. That means Microsoft doesn't face competition. And as the Commission and the Court found, that actually means that Microsoft itself has fewer incentives to innovate than it otherwise would, insofar as it doesn't face competition so it doesn't have the incentives to innovate. So, yes, those who sell Linux will, I hope -- deeply hope -- if it's ever implemented properly, benefit from this decision. But consumers reap benefits from competition. And unless you have competitors, you ain't got no competition (laughter). So, you know, I think one needs to get a bit real about that.
Q: I would contrast your point of view with what I understand to be the traditional Microsoft point of view concerning innovation, which is that innovation is the pure product of massive investment in research, and that X million dollars invested every year is on one side of the equation, and on the other side of the equation, up pops innovation.
Thomas Vinje: Well, my reaction to that would be that, in some circumstances, that's true. I mean, sometimes companies invest lots of money in R&D, and it yields innovation. Sometimes, very useful-to-consumers innovation. But there clearly is another -- especially today, in the software industry -- another model of innovation, and that's, I think, the open source model of innovation, which is much more collaborative and doesn't involve the pouring of millions and hundreds of millions of dollars of a single company's money into the development of a single product. And it seems to me that the open source model has yielded tremendous innovation which is of huge benefit for consumers. So, sure. Microsoft's model can yield innovation and it has yielded innovation. I'd be the last person to say Microsoft has never innovated. Myself personally, I tend to believe they are more of a follower than a leader in this industry, but, of course they have innovated. Of course they have. And given their model, those innovations flow from very large investments. But it's just one model.
Q: All right. Some of the initial reaction to the ruling in the United States has been, "Well, there's a new climate in Europe, and every dominant high-tech company, dominant in a certain area, needs to be very worried." For example, it seems there are hearings this week about Apple's pricing on the iTunes Music Store. Does Apple, IBM, Google, do they need to be worried now in Europe?
Thomas Vinje: I think, again, I have to say what I said a few moments ago: let's get real here. I mean, let's really just get real. This decision is based upon the specific facts of this case related to Microsoft. There's only one company that has anything to fear, you might say, about this decision, and that is the company in Redmond. That's Microsoft.
This decision is based upon facts where you have a single company which has a 95% market share which has lasted for a long time -- and that's very significant in antitrust law, the durability of the monopoly -- and it is a platform monopoly that is very, very powerfully protected by strong network effects in the form of an intense applications barrier to entry.
Now, those circumstances apply, I would suggest, to only one company in the world.
And the reasoning of both the Commission's and the Court's decision is limited to *those* set of facts. It just can't be applied to another set of facts. The bundling decision is premised upon the ubiquity achieved by virtue of the bundling of Windows Media Player with the Windows desktop operating system. Now, if Windows didn't have an essential monopoly in the form of a 95% market share, it just wouldn't -- the bundling would not have achieved ubiquity for Windows Media Player.
So, now I've heard talk about Airbus. Airbus makes great airplanes, but it ain't got a 95% market share. Indeed, I was speaking yesterday evening with the number 2 executive in a rather significant American software company, and she had been approached the evening before yesterday by a relatively senior Microsoft executive suggesting that US technology companies should get together and oppose this European court decision in some fashion, because it was so terribly troublesome for US industry, and her reaction was, "Well, you know, when I get a 95% market share, I'm going to start to worry." (laughter) And you know, she's exactly right.
And let's talk about Apple for a moment. First of all, I'd suggest, you know, Microsoft got slammed. And they got appropriately slammed. And they're trying to figure a way out of this. They're trying to figure a way to get the world to think there's some sort of problem here for anyone else than Microsoft. And so they're conjuring up images of the European Commission going on a rampage against American technology companies. That is, to put it rather nicely, a mirage. That just is something which does not exist, except in the minds of people who don't know the facts. And it strikes me as really rather ironic for Microsoft to get up and say, you know, "This is a terrible threat to IBM, and to Google, and to Apple."
Now, if it's a terrible threat to IBM, people should go ask IBM whether they regard it as such a terrible threat, and I think I know the answer to that question, and I would indeed remind people that IBM is a member of both the associations I now represent and has strongly supported those associations' involvement in this case. So it strikes me as a little off-base to suggest that they're so terribly threatened by this decision.
Google? I don't understand how this decision could at all apply to Google. And again, I'd suggest, go ask them. Microsoft is speaking on behalf of Google, saying Google feels terribly threatened? Let's get real a bit here.
And with respect to Apple, first of all, the hearing that's going to happen, the case that's pending with respect to online music pricing -- and this requires a bit of understanding of EC competition law and procedure -- that's an Article 81 case. It's not an Article 82 case. It's not a case of abuse of dominance, it's a case alleging a restrictive agreement -- horizontal agreement -- amongst a variety of actors, and in all such cases, all the parties to the agreement have to be included in the case, as parties to the case. That does not mean that each of those parties is actually a target of the investigation and would ultimately end up having to be ordered to do something or having a fine imposed upon it.
Indeed, in many cases, I think actually most cases, Article 81 cases -- well, perhaps not most, but in many cases -- Article 81 cases are initiated by one of the parties to the agreement, because they don't like the agreement any longer (laughter), and they try to use competition law as a way of basically getting out of the agreement, saying it's restrictive. Those guys are not going to get fined. Apple is not the target in that case. I must say, that case strikes me as extraordinarily weak, given what I know about it. But I don't think there are facts to support it, and I would bet that it will evaporate. But in any event, Apple is just not the target.
Maybe they got to spend some money on lawyers (laughter), and I admit, that's probably not a very nice thing, but they're not a target; they're not going to be fined. Secondly, and I think much more important with respect to Apple, there was an Article 82 complaint pending against Apple before the Commission on some sort of reference about a year or so ago, and the Commission rejected the complaint -- it was an interoperability-related, Article 82 complaint -- and Philip Lowe, the Director General of DG Competition, has said publicly, and I believe repeatedly, that the Commission did not regard Apple as having a dominant position. It said, "This is just fundamentally different from the Microsoft situation".
The relevant market is the online sale of music. It's basically music stores. And there's no lock-in there. There's no platform protected by an applications barrier to entry. Apple has a whatever, 70% market share, it's been tremendously successful. It doesn't have any way of locking customers in. I mean, they can choose. I could choose to go buy a Samsung player, for example, and download music from plenty of other places than the Apple store. And so the circumstances are totally different. There's no platform, there's no 95% market share over a long period, 10-15 years, protected by an applications barrier to entry. So the Commission said, "We're not going to pursue this case, because Apple doesn't have a dominant position."
Now, there's nothing in this decision from the CFI that would in any way whatsoever alter that conclusion. There's nothing whatsoever that the Commission could fix upon if it wished to, and I'm sure it doesn't wish to, in this decision that would cause it or enable it to change that conclusion. So that's not very long ago the Commission decided not to pursue Apple with respect to an interoperability case. It ain't gonna do it tomorrow, either, as a result of this decision. Apple has some problems in Europe on the interoperability front, but those are problems arising under the consumer protection laws -- especially in the Nordic countries, the consumer protection law is an entirely different body of law than competition law, enforced by completely different agencies; they don't have any connection with one another. So with respect to Article 82, with respect to European competition law, it is unimaginable to me that Apple has anything to fear as a result of this decision.
Q: Yesterday, or it may have been the day before, in the absence of an attorney general for the US Department of Justice, the assistant US attorney general [for antitrust], Thomas Barnett, expressed grave reservations about the [CFI] decision and in fact, I could also mention that although the [US] federal government seems able to continue with the existing arrangement with Microsoft, there are, I believe, seven US states which do not agree, the so-called California Group, which would like the Department of Justice to go further. My question is, has the US antitrust regulator abdicated some of its role, or become toothless? Are we seeing a transfer of importance to the European antitrust regulators?
Thomas Vinje: I think we saw that some time ago. I think we saw that upon the inauguration of the Bush Administration. I think the Bush Administration essentially hung up a very big "Do Not Disturb" sign on its door with respect to enforcing US law on monopolization, on -- to use European terminology, abuses of dominance. That's especially true with respect to Microsoft, where the US Department of Justice under the Bush Administration threw away, in a toothless settlement, the greatest victory the US government had won in generations in the decision issued by the US courts, including the DC Circuit Court of Appeals, a very, very important high court in the United States. And the Bush Administration simply threw away that victory. Had Al Gore taken office, I don't think you would have seen anything like that occur. And I think it's important in that context to consider history here, a bit.
During the Clinton Administration, the Bill Clinton Administration, the US government pursued Microsoft far more vigorously, far more aggressively than -- especially with respect to the breakup order, the remedy they sought was a breakup of Microsoft, and obtained, but that order was reversed for procedural considerations -- but had a Gore administration taken office, we might have seen such an order actually finally implemented. But in any event, the Bill Clinton Administration pursued Microsoft far more aggressively than the European Commission ever has.
The European Commission, since it began cooperating with the US government in 1993-1994 in enforcement actions against Microsoft, marched down the same path as the US government, taking a rather subsidiary role and being less aggressive vis-à-vis Microsoft during the Clinton administration, and then, when the Bush administration took office, the Commission just kept marching down the same path. The Commission has just been consistent throughout, until this very day. It's the US government which has flip-flopped, to use one of the terms the Bush administration has used (laughter). Sorry about that, but maybe what's good for the goose is good for the gander (laughter).
And so, if there's a Democratic administration, you might see a convergence.
Another thing I'd suggest that's worth considering in this context which is not right perhaps on point to your question but relevant nonetheless: I just saw a statement issued by Neelie Kroes, the Competition Commissioner, where she characterized Tom Barnett's statement as being, and I quote, "unacceptable". And I must say, I agree with her that it's unacceptable for a US administration official in such a blunt, unfriendly, and frankly baseless way to attack the second highest court in Europe. This is the European Court of First Instance. This is the second highest court in Europe. And if the Commission, if President Barroso, or if Gordon Brown, or Nicolas Sarkozy, or a European leader, or somebody a little bit lower in the ranks, as Tom Barnett is, but an official speaking on behalf of a European government or the European Commission were to say the same sorts of things, use those sorts of words about, for example, the District of Columbia Court of Appeals, which you could sort of characterize as the second-highest court in the United States, although it's not, really -- there is no court in the United States that's perfectly equivalent -- it's almost like saying the same sorts of things about the US Supreme Court -- the US government would be aghast and correctly so. It's just not right.
Q: Now, there were a number of litigants against Microsoft involved in this case, initially Sun, RealNetworks and so forth. Microsoft managed to get out the cigars and sit down with each of them, and in fact paid out quite large sums of money. [See here, and here, and here.] Now, my question is, were these settlements -- what was the impact of these settlements during the duration of the case? Was some of the evidence removed? Did the case change direction?
Thomas Vinje: The case did not change direction, and I must say one of the things I would like to put on the record here is the Commission has been amazingly -- is the word "perseverant"? They persevered. They have worked unbelievably hard and unbelievably well over a long period of time, and that's a great tribute to Commissioner Monti, Commissioner Kroes, and to the relatively small number of people in the Commission who have just worked so hard on this case. There are not very many government officials in the world, I think, who would have dedicated themselves so intensely and just worked so hard to achieve this result.
But it didn't change the direction, because the Commission has been heading in the same direction. But it did cause troubles. And I think Microsoft, for one thing, they want to try to influence the political atmosphere, and if they're able to essentially buy off, or let's just say settle with important actors, that changes the political calculation. It also deprives the Commission of important support in the sense that the Commission is dependent upon -- you know, it's a very very small group of people, like I say, it's like four or five people -- they're dependent upon information, especially technical, economic, business information -- upon receiving that from various actors in the industry, and if those various companies are prevented from participating in the case and providing information to the Commission by virtue of a settlement with Microsoft, then that affects the Commission's ability to do its job properly.
And in one case with respect to the evidence, RealNetworks submitted emails between senior Microsoft executives concerning, I think you could say their motives for bundling Windows Media Player with Windows, with the desktop operating system. They're on the record in the United States [Ed: see Comes v. Microsoft exhibits 5808, 6644, and 6888, all PDFs.] so not having them before me, it's best that I don't try to say exactly what they said, but they were very illuminating, I think it would be fair to say, of the motives. And those were then put before the record here in Luxembourg by RealNetworks. And then, of course, Microsoft paid some 700-and-some million dollars to settle its case with RealNetworks, and part of that deal was that Real would withdraw from the CFI case and withdraw its evidence. So, you know, that's one example of how it does cause some trouble.
One final thing with respect to the settlements about which one could say a number of things is, you know, as they say, where there's smoke, there's fire, and if there hadn't been a very serious prospect of liability under US antitrust laws -- I emphasize US antitrust laws -- on the part of Microsoft, they wouldn't have paid those billions of dollars in settlements to companies like Sun, and Real, and AOL, and IBM. So I think people can reach their own conclusion on that score.
Q: Let's talk about a different subject. Do you, or ECIS, have a position concerning Microsoft's efforts to obtain ISO standardization for their document format, the OOXML format? They had tried to put it on a fast track of approval, this was defeated in a vote of the ISO countries, however there seems to have been widespread gerrymandering, influence of local national bodies, and so forth.
Thomas Vinje: Yes. I should say first of all that I have not been very deeply personally involved in that matter. I have been somewhat involved in advising, and various things, and discussing those issues with various people, and I've certainly been following it reasonably closely. And indeed, ECIS does essentially have a position on it, and that is that it would be inappropriate for OOXML to be standardized as an ISO standard, because it should not be deemed to qualify as an open standard for several reasons, including the fact that it is not properly fully disclosed, and it is not implementable on non-Microsoft platforms. So the technical objections which were raised by a number of countries are, in our view, very well founded. We were also disturbed to see, but powerless to do anything about, at least in the first instance, the... what you call gerrymandering. If the reports we've heard and read are true, that's very, very disturbing.
Q: Now, if my information is correct, ECIS prepared a complaint concerning Vista with the EC, which if I understand correctly was placed on hold pending the outcome of the CFI decision. Can you tell me a little bit about that complaint?
Thomas Vinje: I can tell you a little bit about it. It would take a long time to tell you more than a little bit (laughter). It's not related -- it's not focused solely upon Vista, it does of course relate to Vista, and the Commission has been investigating it at a sort of relatively low level, but it has been asking us questions and things. But I think it's true that it was not put on hold, but put on simmer (laughter) pending the result in the CFI.
It has a number of aspects to it. One of the key aspects relates to Office. And you know, I think my personal view, at least, is that antitrust authorities, or at least the Commission, has been doing very important things in its case against Microsoft, extremely important things and addressing very, very important issues, but it's essentially been chasing the dragon's tail. And the fundamental problem is the monopolies themselves.
Now, having a monopoly is not illegal under Article 82. But under both Article 82 and US antitrust law, it is illegal to engage in certain conduct designed to preserve, to maintain monopolies. And we allege in our complaint that Microsoft is maintaining its twin monopolies, the Office and the Windows monopolies, by engaging in a variety of monopoly-maintenance conduct.
One area of conduct which we've addressed and find to be particularly significant relates to office document formats. So it's related to this OOXML standardization issue. The whole picture is a complicated one which we can't address in a few minutes, of course, but our view is that one of the key things, if not the key thing, which enables Microsoft to preserve its Windows desktop monopoly, as well as its personal productivity applications monopoly with Office, is its refusal to disclose all of the specifications necessary for the achievement of full compatibility by programs competing with Office -- to achieve full compatibility with Office. And of course, the developers of OpenOffice and other competing programs have come a very long way to achieving compatibility through reverse engineering and, you know, those programs are excellent programs, they're free programs, so the price differential is rather large (laughter), but Microsoft has not disclosed all of the specifications, including for the binaries, the old document formats, and OOXML is not fully disclosed --
Q: Well, it's true that Microsoft has made statements claiming that they wish to be completely open about the file formats, but they're not willing to do that with the binary formats in which the so-called billions of documents exist.
Thomas Vinje: Exactly. The legacy documents which for many people, it's vital to have access to those documents and to be able to do everything one needs to do with them. And indeed it seems a little ironic. Microsoft is saying -- we don't believe it's true, but they are saying that they're going to to disclose everything with respect to this supposedly new wonderful OOXML technology, yet they refuse to disclose the information with respect to the supposedly outmoded binary technology. So maybe I'm missing something there, or don't have sufficient knowledge, but it strikes me as a little ironic.
So we're suggesting -- and I think that the case is buttressed by the CFI decision -- that Microsoft is required under the law to disclose those document formats, and if it discloses those document formats properly and competing programs like OpenOffice can really achieve full compatibility, and full compatibility is essential, because, you know, in a big law firm like mine, it can't -- 98% is not good enough actually, because we can't -- 2% problems adds up to a lot of problems...
Q: Of course.
Thomas Vinje: ...when you have 7,000 desktops around the world, and we have clients we have to communicate, and others, and we just can't accept lack of full fidelity. So, if OpenOffice, for example, were able to achieve full fidelity, full compatibility, that would mean that businesses, and governments, and universities, and all the consumers of productivity applications would have a real choice, and if they had a real choice with respect to those products, word processing, spreadsheets, and the like, then they would suddenly have a real choice of operating systems as well.
Because there are, I think, two aspects, two parts to the applications barrier to entry. There's the quantitative aspect of it, there are these thousands of programs that are written solely for Windows, the Windows platform, or at least first and best for the Windows platform. That's important. But probably more important is what I call the qualitative applications barrier to entry. And that's those very few programs used by most people most of the time. And that's Office.
So if that qualitative aspect of the applications barrier to entry is broken down, suddenly Linux, in particular, is enabled on the desktop. And then, Microsoft really might have to compete, which I think anybody knows it doesn't have to do on the desktop operating system market today. And if it really had to compete with Linux for business customers and government customers in particular, you could see the landscape of the software computer industry change rather dramatically.
Now, if Microsoft, under those circumstances, were able to maintain a 95% market share by competing on the merits with respect to the quality, and reliability, and security, and price, and all the other parameters of competition which people normally have to abide by, if it can maintain 95% market share by competing on those merits, fine and dandy. Go to it. Great. That means they will have succeeded by consumer choice. I don't believe that today, the 95% market share reflects true consumer choice, because there really is no true consumer choice today.
But if the applications barrier to entry were broken in the way I suggested -- and it's not only Office, there are other elements to that applications barrier to entry, and then the sort of core qualitative aspects of it -- that would make a big difference, we think. And so, you know then, maybe, antitrust enforcers around the world can stop chasing the dragon's tail because then the market can really be left to work. Let'em go to it if it really is competition on an open playing field, and stop chasing the dragon's tail.
Q: Well, to wrap up, are you going to get to go surfing in Hawaii, or get some rest? What's next?
Thomas Vinje: (laughter) I'm afraid not. A lot of things on my plate, lots of things to do. Lot of things piled up in the period before this judgment. And just generally lots and lots and lots of things to do. I have a cabin in Norway, and I have very good friends in Hawaii, and San Francisco, and places in the world, and I'd like to spend more time with them, but I think not for a while. Thanks for asking though.
Q: Mr. Vinje, thank you so much for this interview.
Thomas Vinje: Thank you very much. It was a pleasure.