The Edge

Richard Northedge takes on corporate finance

EC penalises Microsoft for its success

Fines of €1.7bn may be as financially insignificant to mighty Microsoft as a parking fine but the US computer software group is fighting the EU’s penalties with the determination of a motorist who knows he is right – even if he also knows that the odds are loaded in favour of the system.

Microsoft is appealing against the record €899m fine imposed in February for alleged anti-competitive practices. That was on top of €497m penalty imposed in 2004 and the €281m that followed two years later.

As a big American company, Microsoft can pay Europe’s fines, but the European Commission ought to realise that its target is big because it is successful. Instead it thinks that success gives it an unfair advantage over competitors. It thus insists that Microsoft should share its success with less efficient or innovative rivals by giving them access to the Windows software Microsoft developed.

The latest fine was because, having allowed it to offer this access on reasonable terms, the EC considered the terms unreasonable.

So far this spat has lasted a decade and with another investigation launched by the Commission this year into Microsoft’s Office software, it could last several more years. But there is an important principle at stake here – the right of an innovative company to benefit from its own initiative.

If a company – whether a drugs business or a supermarket – is to have the fruits of its own efforts taken away simply because it is successful, why bother trying to get ahead?

If Europe wants Microsoft it must be prepared to buy its services on the Americans’ terms. The truth is that Europe needs companies like this and fining them for being more successful than European companies risks killing the goose that lays the golden eggs.



One comment on “EC penalises Microsoft for its success”

  1. dumpao says:

    Patents makes a mockery of competition law.

    This is what is happening with the EU antitrust case.

    Microsoft is appealing the EC decision:

    “Microsoft argues that the licensing terms demanded by the EC violate its intellectual property rights.”

    You can bet they are claiming that Open Source competitors have to pay when commercial services are involved.

    That is the only thing Microsoft is interested in.

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