Tuesday, December 22, 2009

Microsoft and EC Reach Settlement

In Geek news last week, Microsoft reached an agreement with the EC for their antitrust case (yes, THAT antitrust case). Microsoft has agreed to give users the option of choosing from 12 web browsers upon the installation of Windows versions shipped to the EU.

Now, no matter how you feel about about Microsoft (love 'em, hate 'em, indifferent), I think this settlement has a much farther-reaching effect than many people care to consider.

For those of you who haven't been paying attention to this, the case stems back to the 90s, when Microsoft's Internet Explorer browser dominated the marketplace. It was argued that some of Microsoft's business tactics were anti-competitive (such as its agreements with OEMs), and the result was driving competitors like Netscape out of business. Lawsuits were filed, and Microsoft defended its position stating that Internet Explorer was an integral and inseparable part of Windows. It lost that argument, and now, for its punishment, must give consumers the opportunity to shop around for other browsers.

The plaintiffs contend that if given a choice, people will choose browsers other than Internet Explorer. Microsoft, of course, asserts that if people really wanted something different, they'd go get it.

Again, no matter how you feel about Microsoft, one has to really consider the implications of this agreement.

Showing (what I would consider to be) an utter lack of misunderstanding of the marketplace, EU Competition Commissioner Neelie Kroes said, "Millions of European consumers will benefit from this decision by having a free choice about which web browser they use."

She went on to say, according to The Register, "Microsoft’s biz strategy of tying its IE browser to the firm’s Windows OS was akin to a supermarket only offering one brand of shampoo on the shelf, with all other choices tucked away out of sight. “What we are saying today is that all the brands should be on the shelf.”"

Her analogy is very poor, not taking into consideration that the supermarket in her example might have a marketing deal with a particular shampoo company or have a family feud going between the maker of another brand of shampoo.

And, if you just go to the gas station on the corner, they might only stock one or two shampoos, unlike one of the megaliths (Wal-Mart, Target, etc.) that will stock dozens. Her idea of competition is more like forcing a particular chain of supermarkets to carry a set variety of product lines.

With the forthcoming release of a Google-branded netbook running Chrome OS (which, is essential, a browser on hardware), one has to wonder if lawsuits are going to pop up against Google to allow other browsers to be run? Google may very well try the "our hardware and software are inextricably linked" argument, if such a suit were to be filed.

If such a suit were to be filed (and Google were to lose with such an argument), that opens yet another Pandora's box:

Can anyone sue any vendor to be able to run any application they choose on the vendor's platform? Could I sue Sony to let me run the Nintendo OS on a PS3? Now that Apple is selling x86-based hardware, should I be able to sue so that I can get Windows factory-loaded on a MacBook Pro?

Even one step further, would it open the door for any competitor of any type of product to sue for compatibility and integration, predicated on the assumption that customers want a choice. For example, if ABC auto OEM sells 123 accessory, and XYZ auto OEM sells 789 accessory that performs a similar function--could XYZ sue ABC to make their interface compatible so that customers could choose to run XYZ's 789 accessories in ABC's autos?

Conversely, if Google were to win such a suit with the "our hardware is made to run only our software" argument, the opposite question is valid:

Could Microsoft (or any other vendor) start branding computers and sell Microsoft-branded laptops with Windows and Internet Explorer only and bypass the EC's judgment?

One could argue that if a consumer goes to a Microsoft brick-and-mortar store and buys a Microsoft-branded computer, that they are overtly choosing the Microsoft platform.

It may sound ridiculous, but if you really look at the arguments that have been played over the last decade, I don't think those types of questions are outside the realm of legal possibility. And, seeing as how we are quite a litigious race, I could imagine such lawsuits being on the horizon.