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In what the New York Times is calling a "stinging rebuke," the European Court of First Instance issued a much-awaited judgment at 9:30 AM today in Brussels, Belgium, affirming almost all of the March 23, 2004 holdings by the European Commission that Microsoft had abused its dominant position to further expand its market share. But while the victory is a significant one for the European Commission, how great a defeat is this in fact for Microsoft? Perhaps less than first meets the eye, on which more below.
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Today's decision is but the latest in an almost 10 year history of investigations, trials, appeals, and new allegations that initially focused only on Microsoft's activities involving server software, but eventually grew to involve allegations of abuses in the office software marketplace as well. All of these accusations involved contentions that Microsoft was limiting the ability of its competitors to create products that would interoperate with its own, thus further entrenching itself. With time, open source advocates and trade associations filed lodged complaints as well, as Linux gained market share and greater vendor interest, and OpenDocument Format (ODF) compliant products, such as OpenOffice, gained greater credibility.
Although the decision confirms Microsoft's liability for over US$1 billion in fines, that may prove to be a hollow victory. Stated another way, a billion dollars spread over ten years is $100 million a year. During the same period, Microsoft revenues have grown enormously, to over $50 billion a year, fueled primarily by the continuing growth of its operating system and Office products. It has been a tiny cost of business indeed, and a shrewd business decision, to incur a liability to pay one fifth of one percent of annual gross revenues to retain the freedom to exercise the dominance of so lucrative a market. Full Story |
