Posts Tagged with “EC”

This idea sounds sort of reasonable at first, but it’s built on a logical fallacy.

The claim is that the tying of IE to Windows harms competition, innovation and user choice in browsers. Microsoft does not need to be 100% successful for this claim to be true. A single plant growing in a toxic environment does not mean that the environment is suddenly healthy. It doesn’t mean that all concern with the environment should fade or that attempts to improve the environment should be abandoned. That plant may be prosperous, but still deeply constrained by its environment.

Mozilla is extremely healthy, but still constrained by the environment IE has created. We’re constrained in being able to reach people of course, since IE is utterly ubiquitous and hides the possibilities of alternatives. We’re constrained in other ways as well. We’re constrained in our ability to enable new innovations — we need to find ways to make the Internet continue to work for the hundreds of millions of IE users who only Windows-based distributions reach. We’re constrained in the ability to build new standards into the Internet itself. In parts of the worlds — Asia in particular — we’re still highly constrained in our ability to even display web content, due to IE specific content.

And of course, the EC’s concern is not simply whether a single, unique “plant” like Mozilla can survive and prosper against all odds. The question is whether competition and innovation themselves are being harmed.

This theme actually has two related topics.

1. Government shouldn’t get involved with technology.

There’s no disagreement that technology is best developed by technologists and entrepreneurs rather than government.

Government does have a role to play in consumer protection. Governments regulate the formation of companies, they require disclosure for some companies, they regulate the quality of products. Some governments also protect consumers by identifying certain kinds of competitive activities as unacceptable.

One could say that competition laws in general are bad, or competition laws relating to monopolies are bad. Maybe that’s what the comments are saying. But when these laws exist, I don’t understand the argument that technology companies should be exempt.

2. Mozilla should not get involved with the EC.

I wonder if this argument stems from the belief that the EC will reverse course if Mozilla doesn’t get involved. This is flattering in a way, but it doesn’t reflect our experience. The EC has been looking at this case December of 2007 when Opera filed its complaint. The EC has made its decision to move forward without Mozilla involvement and it seems wildly speculative to me to think the EC depends on Mozilla.

This argument may also be a way of expressing concern over the potential remedies. As I noted in a prior post, I think it’s deeply unwise for Mozilla to sit out the remedy discussions and learn what the EC is thinking after a final decision.

It’s also possible this argument stems from the idea that Microsoft hasn’t done anything except compete. If one rejects the idea that there is any limit on corporate competitive behavior this idea makes sense. If one accepts that corporations — just like individual human beings — face some restrictions in how they pursue their competitive goals, then the picture of Microsoft’s activities that emerges becomes quite different.

Microsoft did not obtain its IE hegemony solely through competition on the merits of IE. A number of illegal activities were also involved in creating IE’s market dominence. At the end of this post I’ve included below some very brief excerpts from the US District Court Finding of Facts that describe some of these activities.

One might still wonder what the EC should do today as a result. But the idea that Microsoft is an innocent victim is deeply flawed.

” . . . Microsoft has done much more than develop innovative browsing software of commendable quality and offer it bundled with Windows at no additional charge. . . . . Microsoft forced those consumers who otherwise would have elected Navigator as their browser to either pay a substantial price (in the forms of downloading, installation, confusion, degraded system performance, and diminished memory capacity) or content themselves with Internet Explorer. . . . The ultimate result is that some innovations that would truly benefit consumers never occur for the sole reason that they do not coincide with Microsoft’s self-interest.”

A number of comments in the EC – Microsoft discussion have asked why Microsoft would be treated differently than everyone else, or shouldn’t be able to do whatever it wants with Windows.

Microsoft is treated differently because of the monopoly status of its Windows operating system. Having a monopoly position has enormous consequences, both business and legal. A monopoly exists when a single entity controls nearly all of the market for a given type of product. Or, to quote from Wikipedia “a monopoly . . . exists when a specific individual or enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.” By the mid-1990′s Microsoft Windows had over 90% market share for Intel-based personal computer operating systems, and was moving closer to 95%.

Being a monopoly has some great rewards for a company. It can mean very little pressure on price or quality, even for a critical product. But a monopolist is not free to do whatever it wants to protect its dominant market position. A variety of governments, including the EU, have concepts of unfair competition. These concepts include limits on what a monopolist like Microsoft can do. Both the EC and the US courts have found Microsoft guilty of engaging in impermissible activities with regard to its Windows monopoly.

So to answer the question, yes there is a reason for singling Microsoft out: it alone has a monopoly on (Intel based) personal computer operating systems.

If we drop the word “only” out of this sentence I suspect we have 100% agreement. Building the Internet that we want to live in is the fundamental reality of Mozilla. This is our shared purpose, and it’s what makes us effective.

But is building Firefox the only appropriate response to problems in the market? The EC has initiated action that is intimately and directly related to the world we are building. I believe we must get involved; that ignoring this is like “putting our head in the sand.”

At the very least we should offer our expertise to the EC. Competition in the browser space is important because it is critical to building an innovative, open and participatory web. We have experience in this area that is unusual if not unique. We have a chance to bring this expertise to the EC as it moves forward. I would feel remiss if Mozilla were to let this opportunity go by.

In my last post I listed a set of themes I’d like to address regarding the EC and Microsoft.  I expect to post in roughly the order listed.   But first I want to comment on the remedies issue briefly.

Most of the discussion of potential remedies focuses on either shipping Windows without a browser or on a “must-carry” requirement, which Microsoft described in its recent filing with the U.S. Securities and Exchange Commission.   These may be the most obvious possible remedies, but they are not the only, or even necessarily the best possible remedies.

I think everyone agrees that a good remedy is difficult to craft.  There’s great disagreement over whether it is appropriate to try.  I’m going to describe in subsequent posts why I think it’s appropriate to offer Mozilla’s expertise to the EC rather than simply wait to see what happens.

It would also be good to have a wide-ranging discussion of possible remedies.  We’ll undoubtedly find that most possible remedies are flawed, some so deeply that they might be worse than doing nothing.  We may find some remedies that will improve the situation.  I’m inclined to think this is the case, although I too understand the complexity of the setting.   If that discussion hasn’t developed before I finish a couple of the posts I listed above, I’ll try to spark it with some suggestions.