I’m not a lawyer, but I think the fat lady’s singing

David Braue
23 January, 2009
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News about new legal action usually evokes one of two responses: “it’s about time!” or “what the…?”

Yet while new actions against Microsoft for anti-competitive behaviour usually get the former response, I admit to some of the latter after reading that the European Union has resumed antitrust investigations against Microsoft because, from what I can tell, Microsoft is still bundling Internet Explorer with Windows.

I never really agreed with the EU’s contention that bundling a Web browser with Windows constituted an abuse of monopoly power, since Microsoft never stopped people from installing their own alternative browsers if they wanted to. However, this latest action seems hugely anachronistic given the changes in the market over the past few years.

It also, I might suggest at the risk of igniting a flame war, carries some lessons for Apple.

These days, Firefox – my browser of choice and the preferred browser of many users on Windows, Mac and Linux desktops – has over 20 percent market share and Microsoft lost 3 points between October and December alone. Safari is still relatively low at 8 percent, but is making steady progress towards broader use – particularly since it is now available on Windows too.

So while Microsoft still has the majority of Web browsing share, it’s no longer a foregone conclusion that it is simply stifling competition as it was accused of doing to push Firefox’s spiritual successor, Netscape, into oblivion.

Of course, there was one other major issue back then: Netscape was charging for its browser, something that built up a revenue stream that I recall paying for some very nice digs in a refurbished warehouse in South Melbourne. Microsoft’s crime was to give IE away along with its operating system.

Curiously, the EU case seems to have been instigated at the behest of none other than Opera Software, a Norwegian development house whose Opera Web browser has made some significant strides – for example, it is the Web browser of choice on the Nintendo Wii – but is still struggling far behind Firefox and, at last count, had a market penetration of around 0.7 percent – below the 1 percent achieved by Google’s Chrome in less than six months.

The EU’s regulators take these figures as a sign of monopolistic behaviour, but I take a different message from it: nobody, absolutely nobody, is interested in Opera. Scapegoating Microsoft isn’t going to suddenly make Opera that much more appealing.

There is a fine line between sour grapes and legitimate legal case, and my gut feeling is that this latest EU action has crossed it. Surely, the regulators have more relevant and useful things to be doing with their time?

I mentioned potential ramifications for Apple. There are comparisons in this case with the Mac ecosystem, which has been under similar fire recently in the seemingly endless legal stoush between Apple and Psystar, that upstart US computer maker that is selling non-Apple branded PCs running Mac OS X.

These systems are the computer equivalent of what you might expect from the love child of Angelina Jolie and the Elephant Man: beauty (Mac OS X) mixed with, well, fugly (shapeless, boxy PCs).

But looks aren’t at the root of this case: rather, Psystar is now alleging that US legal precedent means that once it has bought its copies of Mac OS X from Apple, Psystar has the right to do whatever it wants with the property – including onselling it to customers. And Psystar’s theory, if I understand it correctly (and, I reiterate here that I Am Not A Lawyer) is that Apple simply has no right to dictate the terms of that secondary transfer of property.

It seems like Psystar has a point here. What Apple is doing is the equivalent of, for example, me selling you my dual-fuel ute but banning you from filling it with LPG. Even if you agreed to that, if you then sold that truck to someone else, could I still ban that person from filling it with LPG? If they did it anyway, would I have any right to prosecute them?

These two cases have one thing in common: allegations of monopoly power. The curious thing is that, in one case, Microsoft seems to be able to do no right; it complied with EU doctrines by releasing an IE-free version of Windows that nobody wanted. It even went so far as to release an entire operating system (Windows Vista) that nobody wanted and a follow-up (Windows 7) that doesn’t look much different.

My question: would we expect the same of Apple? After all, it does hold a monopoly in the Mac ecosystem, and enforces that control with an iron fist that we have come to accept as the consequence of products that are, well, absolutely cool.

But what if Opera complained to the EU that Apple bundles Safari with Mac OS X, and argued that bundling constituted an unfair barrier to entry for competitors into the Mac market? What if Adobe sued Apple for bundling iPhoto with Mac OS X, alleging that its ubiquitousness has made it impossible for rival photo managers like Adobe Photoshop Elements to gain a foothold on the Mac. What if Ulead Systems, which makes some fantastic video and DVD production software for Windows, argued that Apple’s bundling of iMovie and iDVD had kept it out of the Mac market?

Your inclination may be that such arguments are hypothetical and farfetched – but I suggest that, as Apple’s profile continues to grow, they may not remain as such.

Interestingly enough, it appears Microsoft’s solution to all of this is to keep movie editing, photo management and other software out of its upcoming surprisingly-popular Windows 7 operating system (more on this next week): those modules will apparently be available for separate download, something I take as a subtle nod to regulators to leave it alone.

Yet even now, in 2009, the EU still seems determined to argue that consumers would be better off if they had just that – an operating system onto which they had to install their own Web browser. Which would be disastrous given that many people using computers still don’t know how to install software or use a Web browser.

Surely, instead of a knee-jerk reaction the EU regulators might consider urging Opera Software to consider other reasons it isn’t exactly setting the world on fire. Because the other option – buying an operating system without a Web browser these days – is as unthinkable as it is now unthinkable for Mac OS X to ship without iPhoto or iMovie. Because, especially in difficult financial times where vendors need software sales more than ever, companies and regulators need to be aware of the very significant difference between anti-competitive and anti-consumer.

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