PC users caught in EU-Microsoft stand-off

By : |June 15, 2009 0

LONDON, UK: Microsoft’s  move to answer European Union complaints by selling its next version of Windows without including its own Web browser will strike the software giant’s detractors as too little, too late.

But any effort to restrain Microsoft risks making computers even harder to use than they already are. Consumers are left to struggle with hundreds of irritating technical problems thanks, in part, to what amounts to a decade-long standoff with regulators. This has stalled greater innovation in the market for information tools for office workers and home users.

Regulators, and EU competition authorities in particular, have a poor track record for finding technical remedies that address Microsoft’s indisputable market power. Microsoft has proved unable or unwilling to fix basic problems that make its software hard to use and leaves gaping security holes.

Microsoft this week proposed that it ship the forthcoming version of its Windows operating system in Europe separately from its Internet Explorer web browser. The implication is that PC makers will get to choose whether to offer Internet Explorer or a choice of browsers to consumers.

The European Commission, due shortly to rule on whether Microsoft has abused its monopoly in the desktop software market, said in response that Microsoft had rebuffed its idea for Windows itself to offer consumers a built-in choice of browsers. This would have given new users a set of browsers to choose from, much like a voter chooses a candidate when filling out an election ballot.

The big problem for regulators is the speed with which the market continues to change. A good example of this paradox is a five-year-old EU enforcement ruling against Microsoft. The EU rejected Microsoft’s proposal to give computer users a choice of media players and demanded it offer a version of Windows without a media player. Ironically, the two sides seem to have switched positions in the latest standoff.

A study this year in the Antitrust Law Journal by academics at New York University found no noticeable effect from this earlier effort to rein in Microsoft. (A version of the 56-page report is at http://tinyurl.com/eubundle/).

By the time the EU settled the media player case, the market for listening to music and watching videos had moved on. Apple Inc’s iTunes store, with its embedded music and video player, overtook the market for standalone players such asWindows Media Player or Real Networks RealPlayer.

This gave rise first to the iPod, and more recently to the iPhone. Similarly, multimedia software company Adobe’s development of video player software embedded into Web pages gave rise to YouTube and other video-sharing sites, removing the need to install separate video software.

Web browsers are where users spend more and more of their computing time, making operating system software like Windows increasingly irrelevant. Many analysts predict Windows 7, due out in October will be Microsoft’s last great desktop operating system relase. Consumers already use browsers to search for or publish information, watch videos, listen to music or communicate via e-mail, social networks or other tools. This trend looks unstoppable.

Perhaps the most effective penalty against Microsoft has already been meted out.

The company’s ability to move quickly to add features to its products has been hamstrung throughout this decade, thus creating many fresh openings for rival software makers. So far, Microsoft has paid out billions of dollars in fines to settle lawsuits by governments and private companies for previous abuses.

Without close monitoring of Microsoft, robust competition could not have taken root. The irony is that regulation policies aimed at protecting consumers eventually may hurt them.

There is a point at which Microsoft deserves an end to what amounts to a form of regulatory house arrest. Regulators will want to keep a close eye on Microsoft, but it needs to be unshackled to compete without unwieldy requirements on how it defines new products.

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