That was quick. The EU shot out a release stating that removing the browser provides the consumer with less choice than shipping a Microsoft browser, at least in the case of the few percent of buyers who buy Windows at retail. I guess that means that European consumers lost the choice to not use the Microsoft product. Microsoft will have to watch out for not shipping other products that it does not make.
The Commission notes that the computer manufacturers are now free to install any browser they choose – and they have to make a choice, even if they previously did not care. As I noted yesterday, IE is the easiest choice for them, and it is easy for their customers to load an alternative browser, if they care. But that approach will likely fail to satisfy the commission, given the content of the release.
The EU’s proposal of a ballot screen (actually, it seems to be Opera’s proposal) , which will force Microsoft to enforce a selection of alternative browsers through the PC manufacturers, is interesting but seems to fail certain tests of soundness. Who decides which browsers go on the screen and when can they be deleted? Can I write my own browser and demand that Microsoft include it? What about Lynx? Does Microsoft have to include contractual terms that force OEMs to buy competing software? Will there be dawn raids and secret agreements found in the shadows?
The economics of the technology business are tricky because of the rapid transition rates. Competition is defined by innovation as much as pricing. An innovative browser – if it offers material and meaningful advantages over the competition – will sweep thorough the market.
However, in the presence of competitor complaints, a dominant market share, and consumers that don’t seem to care, the Commission is struggling to find a sensible remedy. Now, was that ballot or bailout…
2 responses so far ↓
1 Karsten // Jun 13, 2009 at 6:24 am
Competition law is about enforcement of market rules, consumer benefit is secondary because a free competitive market benefits consumers. Microsoft’s self-imposed remedies are irrelevant. It needs to comply with European market rules. Opera filed a complaint on grounds of European law and indeed the competition is distorted by bundling.
“However, in the presence of competitor complaints, a dominant market share, and consumers that don’t seem to care, the Commission is struggling to find a sensible remedy.”
2 Martin Reynolds // Jun 13, 2009 at 11:12 pm
Thanks, Karsten. This is a tricky subject, and I’d like to offer a few more thoughts.
The EU Commission is rooting its judgments in language around consumer harm. Consumer harm is the acid test of a competitive market. For example, if I offer a better product at half the price and eliminate all competition, should I be forced to raise my price to protect competition? Obviously not, unless I then use my dominant position to raise prices – and run into very clear antitrust territory.
One question that might be raised, is why are computer manufacturers not bundling Opera on their systems? The answers could include: there is no demand for it; it is easily loaded at any time; it costs too much.
Another question is, what exactly are the rules?
Last time, it was unbundling. This time, it looks like bundling someone else’s product. If consumers still choose Microsoft, will the Commission reverse its decision?
Microsoft’s solution has positives, in that it pushes the issue to market forces. But obviously, the Commission expects the market to choose Microsoft, which is why they suggest the ballot button.
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