[eccr] The Economist: MONTI V MICROSOFT

> MONTI V MICROSOFT
> AUGUST 7TH 2003
>
> The European Commission gives the world's largest software company one
> last chance to defend its behaviour before dishing out remedies and
> fines
>
> EVEN critics now admit that Microsoft has matured as a company, in
> particular after its recent decisions to forgo share options and to
> improve financial control. But the software giant still is a monopoly
> abusing its market power. That, at least, is the opinion of the
> European Commission. On Tuesday August 6th, its trustbusters gave the
> firm "a last opportunity" to defend itself in a long-running antitrust
> probe. If Microsoft does not come up with good arguments within a
> month, Mario Monti, the European Union's competition commissioner,
> could, among other things, impose a fine of up to 10% of annual
> revenues--over $3 billion.
>
> The allegations made by Europe's regulators are no surprise, although
> they seem to have produced new evidence. Microsoft, they argue, is
> still leveraging its Windows monopoly in PCs into other markets:
> servers, which run things like websites and company e-mail systems, and
> audiovisual software, such as online music players. This could justify
> tough remedies. Microsoft may have fully to disclose how its PC and
> server operating systems talk to each other, so rival vendors are able
> to compete on fair terms. And it may also have to offer a version of
> Windows stripped of its audiovisual software, again to make life easier
> for competitors. It could even be forced to offer a version of the
> operating system that incorporates media players designed by rivals,
> such as Apple Computer or RealNetworks.
>
> Much depends on the details, but these remedies would go further than
> those Microsoft agreed to in its settlement with America's Department
> of Justice. This may not be a bad idea, in particular when it comes to
> making sure that Microsoft does not unfairly extend its dominance into
> the server market. America's trustbusters themselves recently had to
> prod the firm into making it easier for competitors to license
> communications protocols that let PCs interoperate with servers.
>
> Mr Monti's critics say he is picking a fight that has already been
> settled on the other side of the Atlantic. But the European Commission
> is at pains to point out that its case is different from the one
> brought by the Justice Department, which had originally sought to have
> Microsoft broken up because of anti-competitive behaviour in the market
> for internet browsers. "The case we have is too strong for the
> company...to ignore," said a commission spokesman, adding that Mr
> Monti's team hopes to bring things to a conclusion within months, not
> years.
>
> The danger, however, is that tightening Microsoft's antitrust
> straitjacket (or imposing a stiff fine, for that matter) could trigger
> a transatlantic conflict--of the sort that was widely discussed when
> General Electric's takeover of Honeywell was blocked by Mr Monti after
> it had cleared regulatory hurdles in America. In any case, the European
> Commission's final ruling in the case is unlikely to be the last word.
> Microsoft has signalled that it would, if necessary, take the matter to
> the European Court in Luxembourg, which has thrown out a number of Mr
> Monti's antitrust decisions recently. Then again, negotiating a
> settlement would surely be more fitting for a mature company.
>
>
> See this article with graphics and related items at 
> http://www.economist.com/cities/displaystory.cfm?story_id=1976593
>
> Go to http://www.economist.com for more global news, views and 
> analysis from the Economist Group.
>

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