September 17th, 2007

EU emboldened; Who's next on the hit list?

Posted by Larry Dignan @ 6:50 am

Categories: Apple, General, Google, Government, Legal, Microsoft, Red Hat, Software Infrastructure

Tags: Brad Smith, Red Hat Inc., Market Share, Apple Inc., Microsoft Corp., Intel Corp., Court, Larry Dignan

Now that European regulators got their big victory over Microsoft attention should turn to who’s next on their hit list.

The EU case against Microsoft market position and anticompetitive behavior boiled down to two items:

• The ability of Microsoft to bundle its media player with Windows considering the company’s market share;
• And whether Microsoft has to share communication protocols on the server side in the name of interoperability.

Microsoft struck out on both counts Monday when its appeal failed (see Techmeme). Now Microsoft General Counsel Brad Smith was far from combative in his press conference that just ended, but he did make one statement that should be ringing in the technology’s industry’s ears.

“The ruling gives the commission quite broad power,” said Smith.

Indeed, the EU has multiple targets to consider, especially as regulators want to flex their muscles. The Reuters story on the EU Competition Commission notes that the group has the green light to pursue other antitrust complaints against Intel, Qualcomm and Rambus.

There are a few more names to be added:

Apple: Don’t be surprised if the EU gets revved up on this one. Apple has a hefty market share in Europe with iTunes. Doesn’t share its DRM protocols with others and is basically a walled garden. Also: Apple has already had its run-ins with regulators in France before.

Now that the EU has given the concept of interoperability priority why wouldn’t a broader battle with Apple be opened?

Google: Interoperability may not be an issue, but market share could be. Smith made sure he tossed Google’s name out there for giggles. And why not? If Microsoft has to deal with the EU why shouldn’t its arch rival? When Google closes its DoubleClick deal don’t be surprised if the EU whips something up.

Intel: Intel’s market share means the chip giant will have a big bull’s eye on its back with the EU. Intel has already had its problems in the EU. Any complaints by AMD against Intel are likely to find a more receptive audience in the EU relative to the U.S.

And you could go on. Why couldn’t the EU target any company with a big chunk of market share and a bundle of software?

“This decision will occupy the thoughts and discussions of many people in the months and years to follow. It is one of those decisions that has extraordinary impact,” says Smith.

Part of that statement is spin. But a big part of it is reality.

That’s why when I see statements like this from Red Hat they spark a “be careful what you wish for” reaction from me:

“Today’s decision by the Court of First Instance in Luxembourg in the Microsoft matter is great news for innovation and consumer choice, both in Europe and around the world. The Court has confirmed that competition law prevents a monopolist from simply using its control of the market to lock in customers and stifle new competitors,” said Matthew Szulik, Chairman and CEO of Red Hat. “In our business, interoperability information is critically important and cannot simply be withheld to exclude all competition. Given Red Hat’s firm belief that competition, not questionable patent and trade secret claims, drives innovation and creates greater consumer value, we were pleased with the overall decision and look forward to examining the decision in greater detail. Red Hat would like to congratulate the European Commission, and particularly Commissioner Neelie Kroes and her services, for their persistence and courage in bringing this matter to a successful result.”

Be careful Red Hat. At last check your market share was going up too.