Was Microsoft's EU fine too much? One economics professor says, "Yes"

[scottie]

timmah said:

scottie said:
@ timmah.

You are correct that MS is under no obligation to offer their competitors products. If they don't bundle the computer with WMP, they are under no compulsion to offer itunes bundled. However, you kind of need a web browser - even if only to download a different web browser.

What they can't do (In the EU) is use their monopoly in the OS business to give their products an unfair advantage. Wrangling over the definition of 'monopoly' and 'unfair' is why we have lawyers and juries.

I am aware of the facts, you don't need to bother simply repeating them.

I love your use of the term 'voluntary'.

There was an investigation, which (MS knew) was likely to end in a court case, and likely to end in MS losing that court case.
In order to prevent them from losing the court case, which would involve very serious penalties, MS said "We will start offering a browser selection screen if you drop the investigation"
This was effectively a plea bargain, except MS didn't have to explicitly plead guilty.
MS then failed to keep the terms of their bargain, and were fined for it.

MS took voluntary action, in order to avoid being charged with the crimes they committed.

The simple facts are
* By bundling I.E. with Windows, and not bundling other browsers, MS broke EU law. You may say they did nothing illegal, but that is because you know USA law, not EU law. They broke the law.

* MS voluntarily made a promise to the EU that they would start obeying the law in order to secure a voluntary promise from the EU not to investigate the fact that they previously broke the law.

* MS broke that promise, leaving the EU free to break theirs.

I can understand you thinking that the fine was too high, but you seem to be saying that MS did nothing illegal? This is quite simply untrue, I don't understand why you can't grasp this.

The bolded statement is where I disagree. If MS were making it difficult or impossible to download and install competing browsers, this would be an issue, but that is simply not the case. The fact that their market share was in decline is strong evidence that the practice in question was not harming competition unfairly through their prominent position. In addition, a user can easily do a search for other browsers, then very easily download and install another browser right from IE, how is this harming competition. The law in question essentially states that a company cannot use a prominent position to unfairly limit or harm its competition. The fact that bundling IE clearly does not limit or harm the competition (since consumers can easily download a competing browser and use their own choice without limit) means the law was not broken IMO.

The law is certainly not clear about this specific behavior, so defining what constitutes anti-competitive practice is somewhat subjective. Sombody who believes in open markets with little government interference (only for blatently wrong or illegal behavior) will side with MS on this one because the market can, and did work in this case irrespective of the unnecessary EU decision. Somebody who belives Government is the answer to everything will want the nanny-state to babysit the poor, pathetic, uninformed, helpless citezenry who clearly is incapable of downloading and installing the browser of their choice (or deciding what size soda they want). The reason we disagree on this is not because one of us does not understand the law, but because we have a very different political philosophy, resulting in a differing interpretation of what constitutes harmful anti-competitive behavior.

Seeing that MS did break their agreement, but that it was most likely inadvertent and was quickly remedied once discovered, I'd say the fine is much too large.

At the first part of it. You are right that it is not 100% chance that it is illegal, otherwise the EU would have fined them instead of saying that they would start an investigaton. But the only reason MS made that voluntary agreement was because they thought that the investigation would probably go against them.

 

At the open markets point, I am neither big government or small government. For every decison, I find as much information about the effects, or potential effects of the decision and ask myself which world I would rather live in. You judge the government's actions, I judge the results. The results of the browser ballet were a reduction in MS's monopoly, and increased competiton, as any good Capitalist knows leads to improved results for consumers.

 

As for the fine being too large, that depends if we're looking at the justice system as a way to get justice/revenge for past crimes, or to prevent future crimes. A smaller fine would do for the former, but not for the latter. You obviously see the justice system as a way that criminals get what they deserve? I think that's the wrong focus, a justice system based around stopping reoffending is going to lead to a better world to live in.