Microsoft's troubles in Europe are far from over, as Neelie Kroes, The EU competition commissioner, has warned. We review the past and future options for Microsoft and the European Commission.
The 80s were the dog-eat-dog days of business. Top of the pile was Microsoft, the biggest and baddest of them all, led by Bill Gates, who invented the computer, the universe and everything.
Gates looked a bit like the nerd on the cover of Mad Magazine, made it to the cover of Time magazine, and was rich and successful beyond anybody's wildest dreams.
The view of Gates and Microsoft from inside the computer industry was more circumspect. PC software looked amateurish and nobody took it too seriously until the cultures began to collide in the business world during the middle of the decade. The affordable desktop computer, which sprang out of an unholy alliance between IBM, Intel and Microsoft, changed the face of computing in the home and in the work place, and for the most part was beneficial to the user, if only because it was cheap and accessible.
Microsoft always took more credit for this revolution than it probably deserved, but had a way of coming out on top, which owed everything to its early dominance of the operating system market for the IBM PC and its clones. From this dominance grew its prominence on the desktop, and the gradual eclipse of its competitors. The question that was always being asked of Microsoft was how much did the company owe its success to the quality of its software, and how much to the ruthlessness of its marketing?
From the beginning Microsoft had a special relationship with the original equipment manufacturers (OEMS), and made this relationship tell. Each innovation on the desktop, each new tool and the company that made it, either fell by the wayside or was assimilated into the Microsoft hive.
In the hive
Compaq had its arm twisted to stop it bundling Apple's Quicktime on the desktop. Internet Explorer, and later, the Windows Media Player, were bundled into the operating system, and given away free, sucking revenues and market share from Netscape, Real Networks and Apple. The squashing of Netscape and the subsequent death of the browser market led to Microsoft's conviction for monopolistic behaviour before the US antitrust courts.
Microsoft added platform-dependent "features" to Java to render Java's multi-platform features redundant, and when that ended up in court, developed the .NET platform, a very successful and popular alternative that reproduced many of the major features of Java with the notable exception of its multi-platform capabilities.
Kerberos, the encryption standard developed by MIT, was extended by Microsoft with the apparent objective of inhibiting interoperability in the workgroup server space and, in the words of Jeremy Allison of Samba: "these changes were treated as trade secrets, patented if possible, and only released under restrictive non-disclosure agreements, if released at all."
During the US anti-trust trials, Steven McGeady, a vice president of Intel, testified against Microsoft, Intel's most important trading partner, asserting that Microsoft intended to "embrace, extend and extinguish" competition by substituting open standards with proprietary protocols, and claimed that Intel had been warned to cease development of its Native Signal Processing audio and video technology, which promised to vastly improve user experience of the desktop - or else Microsoft would bypass Intel and develop Windows exclusively for AMD and National Semiconductor chips. "It was clear to us that if this chip did not run Windows it would be useless in the marketplace," McGeady testified. "The threat was both credible and terrifying."
Microsoft has always had an ambivalent relationship with the concept of interoperability and with the standards that make interoperability possible, tending to view the protocols and data formats it uses as "de facto" standards and "trade secrets" which it is free to "extend" with no obligation to share. This may not always be deliberate behaviour. Where there is a monopoly standards become incidental, an option rather an obligation. This tendency has been at the root of Microsoft's problems in the US and European courts. Microsoft is not being penalised for success, but for shutting the door on competition, and resisting any requests to modify its behaviour.
Microsoft's troubles in Europe began as early as 1993, when Novell complained that "onerous licensing conditions" imposed on OEMs by Microsoft was pushing NetWare out of the workgroup market.
In this market Novell had been the innovator, but Microsoft had muscled a napping, but still relevant, Novell out of the picture. Thus began a long history of litigation which culminated in the 17 September 2007 decision of the European Court of First Instance, which upheld the European Commission's decision to fine Microsoft and uphold the principle of interoperability.
The September judgement came at the end of a ten year case initiated by Real Networks, supported by Sun Microsystems, Novell and others, all arguing that innovative products were being pushed out of the market on the back of Microsoft's monopoly. Over the years each of these litigants withdrew from the case after doing deals with Microsoft worth billions of dollars, leaving the Free Software Foundation Europe (FSFE), the Samba Team, and their allies to fight the case to the finish.
As Jeremy Allison of the Samba Team told Groklaw: "the copyright in Samba is spread across many, many individuals, all of whom contributed under the GNU GPL 'v2 or later', now 'v3 or later' licenses. You can't buy that. There's nothing to sell. There's no point of agreement for which to say 'here are the rights to Samba, we'll go away'. We're in the, some would say unique, some would say unenviable position, of not being able to sell out. We can't be bought."