EC Says OK to MS IE Deal: How Much of a Win?

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Neelie Kroes, European Commissioner for Competition Policy, had some news this morning:

Today is an important day for internet users in Europe. Today, the Commission has resolved a serious competition concern in a key market for the development of the internet, namely the market for web browsers. Now - for the first time in over a decade - Internet users in Europe will have an effective and unbiased choice between Microsoft’s Internet Explorer and competing web browsers, such as Mozilla Firefox, Google Chrome, Apple Safari and Opera.

More than 100 million European computer users stand to benefit from the Commission's decision today. An even higher number will benefit over the five year lifetime of the commitments made binding on Microsoft with today's decision.

“More than 100 million European computer users stand to benefit”? I think that's a little optimistic: many will blithely carry on using Internet Explorer regardless of the ballot screen. And yes, the latter is better in its random incarnation, which avoids bias among the Big 5, but beyond that you'd need to change human nature for it to make much difference.

Nonetheless, in one respect, today's announcement is important. As someone who has been writing about Microsoft for over a quarter of a century, I've noted an increasing tendency of Microsoft over the years to play the legal system to attain its goals. That was most evident in its battle with the US anti-trust authorities, and particularly after the change of administration there made it worthwhile to fight and contest every possible aspect of the court's decision.

So when the European Commission started daring to query some of Microsoft's actions, I fully expected the same endless round of legal delays, quibbles and arguments. And to some extent that happened, at least at the beginning. But more recently there have been clear signs that Microsoft has become less combative and more acquiescent, culminating in today's agreement on the browser ballot screen in Europe.

So irrespective of whether the European Commission was right to intervene here or earlier, and irrespective of whether the ballot screen will do much good over and above what Mozilla Firefox has and is doing, there is something deeper going on here: the EU has established itself as the arbiter of what happens in the European computing market, and Microsoft has accepted that fact.

I think that's huge, not so much for the present as for the future. For each time Microsoft has agreed to the EU's demands, the latter felt emboldened to make more (as victors typically do). That means that it won't think twice about slapping down Microsoft again if it sees something it doesn't like. Indeed, Kroes herself emphasised this aspect in her announcement of the deal:

Finally – and this is very important – Microsoft will within six months, and then annually, report to the Commission on its implementation of the commitments. Subject to certain conditions, Microsoft is obliged to make adjustments to the implementation of the choice screen upon the Commission's request.

This is important because we are dealing with complex markets here. The Commission needs a mechanism that will allow it to fix any unexpected problems that may arise in implementing the decision.

If the browser side represents a clear victory for the European Commission (if not necessarily for the European consumer), I think Microsoft has pulled a fast one in the other, less reported-upon, angle of the latest agreement:

let me also say a few words on Microsoft’s important undertaking on interoperability information.

Microsoft has committed to allow interoperability between third party products and several important Microsoft products. These products include Windows, Windows Server, Office, Exchange, and SharePoint. This initiative is very welcome, as interoperability is crucial for competition in the software industry. In the Commission’s experience, interoperability can be best ensured through the availability of open specifications that can be implemented by every interested party regardless of the business model it follows. Microsoft commits to publish such specifications.

While these arrangements remain informal vis-à-vis the Commission, the package includes warranties that Microsoft will offer to third parties and these can, in turn, be privately enforced. The package also provides for an effective fast-track dispute resolution mechanism that sets the right incentives for Microsoft to comply with its pledges.

You will be able to see the whole interoperability package on Microsoft's website today.

Indeed we can, but despite Brad Smith's hyperbolic claim that it represents “the most comprehensive commitment to the promotion of interoperability in the history of the software industry”, there is a void at its heart.

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