Microsoft versus Europe: Facts and fiction

There’s been a lot of trash-talking and a fair amount of misinformation about the European Commission’s antitrust case against Microsoft lately. Some people go so far as to accuse the Commission of finding reasons to fine Microsoft simply so it can beef up the EU’s funds, and the same people often add that Microsoft should throw its weight around by threatening to pull out of the EU market altogether. Those people are missing some key facts.

First of all, the amount of the fines—while it may appear massive on its own—is only a small portion of both
Microsoft’s and the EU’s funds. The Commission has fined Microsoft a total of €777.5 million ($984.63 million) since March 2004. Between June 2004 and June 2006, Microsoft had revenue of $84.07 billion and net income of $24.85 billion. The fines therefore amount to roughly 4% of Microsoft’s profits. What about the EU’s own piggy bank? Well, for this calendar year alone, the EU budget amounts to €121 billion ($153.23 billion,) and that’s only around 1% of the gross national income of the European Union. I’m not going to look up figures for previous years because you probably get the picture by now: the fines are just fines, and people who think the Commission is using Microsoft as some sort of cash cow are probably smoking something.

Then there’s the alleged possibility that Microsoft could suddenly lose patience and threaten to withdraw from the European market. A recent study commissioned by Microsoft itself clearly shows why that’s not an option. According to the study, 30% of Windows Vista sales in the year after release will come from six European countries that account for 65% of technology spending in the EU economic zone. If Vista’s adoption rate is the same in countries that make up the remaining 35%, the EU economic zone will account for around 46% of all Vista shipments. The EU is obviously a very large source of income for Microsoft, and pulling out of that market would cause the company far more hurt than any fine the Commission can dish out.

So if there’s no theatrical way out of the antitrust hot seat for Microsoft, how will this end? The company’s recent appeal trial appeared to go pretty well for the company, but a decision about it isn’t expected for another six to 12 months. In the meantime, companies like Adobe and Symantec are pressuring the European Commission to bring the hammer down on Windows Vista’s new integrated security and PDF file creation features. The Commission and Microsoft are both playing along, and Microsoft may very well have to compromise sooner or later.

That said, forcing Microsoft to strip out features from its operating systems is misguided at best. The Windows Media Player-free Windows XP N Editions were a spectacular failure in Europe, and similar versions of Vista without security or PDF editing software would likely do as poorly. Consumers want more functionality for their money, not less, and crippled software only serves to make companies like RealNetworks happy. The only way to properly satisfy Adobe and Symantec’s wishes would be to force Microsoft to release nothing but amended versions of Vista in the EU. However, breaking software interoperability between Europe and the rest of the world is hardly a sensible way to go about the Commission’s stated goal, which is to benefit European customers.

In the end, the Commission does have the power to change things, but it needs to come up with sensible sanctions against Microsoft that will both help competition and benefit consumers. I think getting Microsoft to release its internal documentation to competitors was a step in the right direction, but finding other ways to make the company open up its software and file formats—not strip it/them down—would be more helpful than quibbling over feature bundles. This conflict looks to be far from over, though, so the Commission has plenty of time to correct its aim. And of course, Microsoft has just as much time to dodge it.

Comments closed
    • A_Pickle
    • 12 years ago

    That’s good to hear.

    Of course, it’d be nice for the European Commission to get hard on Adobe and Symantec while they’re at it. For that matter, it’d be nice to see the United States Department of Justice crack down on those two, as well as somehow find a way to revoke Real Networks’ trade license…

    • FubbHead
    • 13 years ago

    I don’t see the problem..

    Why can’t Microsoft just cooperate with Adobe, etc, and use THEIR software, and give them a little piece of every sold Vista.

      • Flatland_Spider
      • 13 years ago

      There’s really not one. Adobe just doesn’t want to see their Acrobat monopoly threatened then have to put some work in to compete.

      I think Adobe helped Microsoft design XPS which makes this even sillier. It’s been stated on OSnews that they were working together on the standard.

      MS even stripped the PDF creation function out of Office 2007 to appease Adobe already. It’s still available as a free download from MS’s website.

    • Wajo
    • 13 years ago

    I really dont care about support for PDF’s, i HATE them with all my heart… if it was up to me, they would just dissappear from the face of earth…

    • muyuubyou
    • 13 years ago

    As a multi-OS user I can’t but dream of Microsoft pulling out of Europe. This would guarantee competition in the OS market, forcing hardware vendors and application developers to quit their Windows-centric ways.

    It would also be a big win for open standards and for software developers in general, since Microsoft embrace and extend strategy leaves nobody safe. Yesterday it was Office suites, today it’s AV software. Tomorrow it could be you… many others have been trampled in the way.

    • Satyr
    • 13 years ago

    Hear hear.

Pin It on Pinterest

Share This