On September 17, 2007, the European Court of First Instance (the second-highest court in Europe) rejected Microsoft’s attempt to overturn a landmark European Commission 2004 antitrust ruling and record fine. Not only is this a blow to Microsoft, but it also is not good news to several other U.S. tech giants that have run afoul of E.U. regulators in recent years. Intel is being investigated for the way it prices its computer chips, Apple’s pricing of music downloads is under scrutiny, and Google’s planned buyout of advertising giant DoubleClick has raised concerns over the search giant’s ability to set ad rates in the digital world.
Let’s take a quick look at the Microsoft and the antitrust cases in the EU. There were two issues / rulings:
The first was interoperability – this dealt with the availability and usefulness of APIs for networking with the Windows operating systems, particularly Windows Server. The current issue appears to be the actual prices Microsoft wants to charge for licensing out the interoperability information.
The second area was over the inclusion of Windows Media Player, which supposedly gave Microsoft an advantage over its competitors. This was similar to the DOJ case in the United States over Microsoft’s inclusion of Internet Explorer, which allegedly gave it an advantage over Netscape. The question is, how much of an advantage is it to be bundled with the operating system, versus downloading something by clicking a button? As examples, how hard is it to install (or update) Adobe’s Reader or Flash Player – which are not included with Windows?
In the United States, Microsoft and the government reached a reasonable solution. Microsoft allowed users (and OEMs) to remove the icon and program defaults for Windows. The story was a bit different in Europe.https://www.winsupersite.com/showcase/windowsxp_n.asp). What is interesting is that precisely zero of the OEMs adopted the Windows XP N Editions.
The E.U. insisted that the code not even be included in the operating system. Microsoft released a special version of Windows XP – the XP Home and Professional N Editions, which are identical to XP Home and Professional SP2 without Media Player. The systems are not crippled or broken in any way, except for the exclusion of Media Player (see
Also interesting is the studies done showing usage of the various media players. Five players, listed below, were included in the study performed by the E.U. (Statement of Objections in the Case Comp/C-3/37.792, Microsoft, at https://ec.europa.eu/comm/competition/antitrust/cases/decisions/37792/en.pdf):
- RealPlayer
- Windows Media Player
- Quick Time
- WinAmp
- Music Match
The E.U.’s theory was that Microsoft inclusion of Windows Media Player “foreclosed” its competitors, making it impossible to compete. However, the E.U.’s own data showed that during their two-year investigation that Music Match, Quick Time, and WinAmp increased their market share – only Real Player had a decline in market share, and Music Match increased its share in both raw numbers and percent more than Microsoft’s Media Player did! The following table was compiled by Professor Stan Liebowitz, in a representation made by the Association for Competitive Technologies to the E.U.:
Table 1: Market Shares of Media Players
2000 46.77% 31.08% 11.58% 8.36% 2.21%
2001 43.67% 31.87% 10.30% 8.92% 5.24%
2002 36.19% 35.23% 13.09% 8.39% 7.10%
Change in Share -10.59% 4.15% 1.51% 0.04% 4.89%
%Change in Share -22.63% 13.34% 13.03% 0.43% 221.41%
This table is based on numbers in the E.U. Report referenced above.
And now, we have the ruling by the Court of First Instance. The E.U. appears to be unwilling to accept anything less than to somehow force Microsoft to less be predominant and lose market share.
