War is (not) over

Contenuto non tradotto. Come sempre, volontari sono bene accetti.

The Commission has served a statement of objection to Microsoft following the complaint by Opera Software on abuses in the field of web browsers. I planned to write something on this blog when the news spread, but things have accumulated and I could not find enough time.

An interesting post by Mitchell Baker, followed up by another post by Georg Greve, has brought me back to the topic. I don’t want to write another story (the two references above are quite complete and accurate), just provide an initial Q&A session on what are we speaking about.

Why now? Why is the EC Commission pushing Microsoft on a market that Microsoft is losing? Market share is declining, and new competition like Firefox, Safari, Opera, Chrome is everywhere, ready to break into Microsoft’s Monopoly.

First, market share is declining, but not as fast as the difference in quality and innovation would suggest. If the competition was on the merit, we would see the market share reversed, or a better Internet Explorer, or any combination of both. Ubiquity beats quality. The fact that Explorer is in each and every PC means that the user feels no need to find an alternative. Most of people don’t even know what a browser is, competitors are strongly disadvantaged. Tyingis one of the most clear abusive behaviours. The fact that bonsai competition has been reinstated is not indicative that the risk of elimination is not real, nor that the competition is limited by market choice to the narrow and hard-worked present success.

Second, the browser is delivering its promise: to be the platform. Remember the browser war? Remember that Java and Netscape were to make the operating system a commodity, replacing it as a platform? Now the technology is mature. Ajax, Java and the other technologies are already sufficiently developed to deliver rich, standard-based rich web applications. If Internet Explorer has not been bundled on each and every new computer, we may have seen this day much earlier in history. Thankfully the Mozilla people lived up the promise of their ancestors at Netscape and we are at a tipping point, a singular occurrence in history. That cannot be hijacked as the market was a dozen years ago.

Third, innovation must be fostered. Innovation occurred — after a long, too long wait — as soon as Opera and Firefox started gaining traction. Tabbed browsing, URL self completion, extensions, faster HTML rendering, spellchecking in fill-in boxes, just to name a few of them, were introduced by either Opera or Firefox, in a rather stagnant situation. More competition equals more innovation. More resources coming from a higher share mean more incentives and more resources to be invested by competitors into innovation. The dominant company has no incentives to innovate, just to follow-up enough innovation to avoid mass-migration.

Why Microsoft, why the browser? Microsoft is not the only one bundling different products. Apple is doing the same, and they also sell hardware and a full host of applications. Moreover, Internet Explorer is a part of the Operating System.

If and when Apple will begin to be as dominant as Microsoft is, we could approach this argument. Abuse of dominance is the keyword. Whatever the dent into Microsoft market share in the browser market is, having more than 75% (I have not the exact figures, let’s stay conservative) of each sales is by all definitions a position where dominance is presumed. The game is not fair, since one single company is enabled to dominate the market by sheer force, not by competing on price (browsers are free as in free beer, some are more Free), not competing on technical merit. Basically, not competing.

The browser existed before it was offer as a “component” of Windows. I am using quotation marks here. The browser has a separate market, and it was sold for good money before the market was disrupted almost overnight by an inferior — or at most equally valuable — product. The bundling of two separate entities, one of which called “part of the other” to avoid antitrust is a rather obvious linguistic expedient, nothing more.

Most remedies are going to fail. Remember the failure of Windows Media Player. Now everybody uses Flash anyway. The remedy envisaged by the Commission was inefficient.

Remedies can be efficient if well crafted. The discolsure in the 2004 Decision, however late it came, is bringing new efficiency to the competition in the Workgroup Server Operating System arena. It’s still a long way, but a long journey begins with a small step. The remedies in the 2004 Decision, as far as Windows Media was concerned, were too timid and came too late, when the competition was already defeated and the market tipped considerably. The Commission was perhaps too protective of Microsoft interests and instead of demanding the complete unbundling, required two different versions of Windows. The fact that there was disagreement as to the pricing, and the two versions were priced identically, made the remedy born dead. And the length of the procedure has done the largest damage, a lesson that apparently the Commission has learned very well.

Flash is not substitute of Windows Media. Their fields of application are overlapping, but do not coincide. And Windows Media is today even more dominant.

Antitrust remedies are not a panacea. They must be used with a grain of salt. But sometimes a heavy drug is better than letting the disease spread. If Microsoft, or any other, is afraid that an imposed remedy could be overly damaging, it can negotiate a solution, but that solution must be adequate and efficient. Architectural constraints coming from the underlying operating system are not relevant, because here they are internal constraints that those in control of the operating system can avoid. Consequences arising from self-endangerment are not an excuse. Those constraints are of course really stringent only for competitors, which have no control over the platform.

Must-carry is not sufficient. The simple obligation to pre-install other browsers is no guarantee of a level playing field. Users will always choose Internet Explorer.

The Commission should not be afraid of the fact that users can end up choosing Internet Explorer. If this happens because it is a better application or more suited to the user’s needs, fine. But that must not happen just because Explorer is ubiquitous and better presented to the end users, who are unaware of choice and do not want to install other software, as data and surveys presently show. Sometimes users cannot install additional software, especially in a corporate environment, so one big segment is excluded from any meaningful competition because of tying.

But yes, this objection is true. Must-carry remedies are insufficient. The abuse also consists of not complying with standards, using embrace & extend practices, making the Internet sort of a proprietary field — the exact contrary of what Internet is and the reason for its success: a standard-based bunch of protocols where everybody can plug in. A more far-reaching remedy should be found, that’s my opinion.

Public opinion is also important. If users started refusing non standard-compliant products, that would be a better driving force to competition, and a giant cost-saving. I personally dislike using them, but sometimes I simply don’t know, even when I have better alternatives. People should be reminded that non-compliance costs a lot of money. Web developers know that perfectly, but they have lilttle choice: they must hack the code to support Explorer and the standard, or simply code for Explorer and let users of other browsers out in the cold. It is a lose-lose game.

Commission is helping out lamers. Those losers who have failed competing now are trying to use the Commission to undue what a successful company has achieved, as they are not able to compete.

Come on! Competitors do not have the benefit of controlling the platform. They have not the benefit of controlling what’s preloaded on a computer. There is such a clear conflict of interest that it is a miracle that some competition still exists, and this miracle has been made happen by Free Software: Mozilla is entirely Free Software; Safari‘s engine is Free Software. Opera is not, but how much innovation and money had to throw in to survive in a decimal figure market share?

If two boxers are fighting, but one has iron gloves, would you call the other one who stands 12 rounds “a loser”? Let’s play a fair game, then we’ll see who is the best player.

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