Bashing a company to help expropriate funds to the government

Microsoft is in the headlines again. This time the fuss is regarding its operating system Windows 7. In the following report from WPCentral, the EU commission is looking into punishing Microsoft for the apparent breach of customer service when selling their software. The following bellow is the full article:

“The European Commission announced plans today to open an investigation to determine whether or not Microsoft has failed to comply with its browser choice commitment, which was applied in 2009. The commitment saw the software giant presenting customers of its Windows operating system with a screen listing available alternatives to Internet Explorer. This was put in place due to Microsoft being found guilty of abusing its dominant position with IE in the browser market.

Joaquín Almunia, Vice President of the Commission in charge of competition policy, had the following to comment.
"We take compliance with our decisions very seriously. And I trusted the company's reports were accurate. But it seems that was not the case, so we have immediately taken action. If following our investigation, the infringement is confirmed, Microsoft should expect sanctions"

Competing browsers have previously spoken publicly about the potential antitrust violations Microsoft is dancing around by preventing third party browsers access to the same APIs IE uses in Windows 8. With the down-spiral of IE and the massive increase in users for both Firefox and Chrome, is it worth penalizing Microsoft heavily for a ballot box screen, which arguably adds little value to the user experience?

According to the announcement, the EC believes that Microsoft may have failed to implement the browser choice screen from February 2011 onwards with the release of Windows 7 SP1. It'll be interesting to see the outcome of this investigation, especially from a financial standpoint, with a possible fine of up to 10% of Microsoft's total annual turnover, should it be found guilty of breaching the commitment.”

Now, this is the dumbest case of government expropriation from a bunch of unelected bureaucrats this year. (I am putting aside the shadow banking bailouts, because those concern finance.) 

This “malpractice” coming from Microsoft had to do with an earlier massive fine it had to pay for “monopolizing” the market in browser software. The Commission seized the opportunity to pounce on Microsoft because it violated its commitment to give the option to the customer of choosing an alternative to IE. The Commission is furious because Microsoft neglected making to make this change.

First of all, The Commission should have left the doings of a private company alone. If a customer was dissatisfied with the product he purchased and the service rendered for the amount paid, there are civil courts where these matters are disputed. In my view, I am certain, that the customer couldn’t care less about this option, because Windows 7 allows you to download an alternative to IE.

And even if Microsoft did promise to make this change, and it failed to comply with this regulatory statement, any customer could have complained. I haven’t heard of any complain against Windows for not installing an optional step in the installation process of its software.

The part of the article that struck me most was the following:

“Competing browsers have previously spoken publicly about the potential antitrust violations Microsoft is dancing around by preventing third party browsers access to the same APIs IE uses in Windows 8. (italics added)

It seems that the competition wants a free ride on the back of Microsoft and is using the government to do their bidding. According to Wikipedia:

“An application programming interface (API) is a specification intended to be used as an interface by software components to communicate with each other. An API may include specifications for routines, data structures, object classes, and variables. An API specification can take many forms, including an International Standard such as POSIX or vendor documentation such as the Microsoft Windows API, or the libraries of a programming language, e.g. Standard Template Library in C++ or Java API. (italics added)”

The competing vendors are complaining because Microsoft’s API language doesn’t allow for competing vendors API to be successfully integrated into Windows.

My answer is: And, so what?

Microsoft, as a private company doesn’t need to comply with the whims of the competition. If individuals didn’t enjoy the service provided by Microsoft, it would leave Microsoft and buy a different software provider. Now, the case comes, where Microsoft is accused of being a monopolist. It is too massive and too expensive to compete against them. But this surely is not the case.

Google Chrome, Firefox and others have successfully pummeled IE into the ground. They have successfully integrated their browsers to work with Windows. They have therefore worked around this supposed stranglehold that Microsoft has.

But, to a bigger issue. If Microsoft is fined 10% of yearly turnover, which amounts to about 20*4 billion= 80 billion dollars of revenue according to Microsoft Investor Relations, the fine would be around 8 billion dollars Now, where is this money going to go to? Is it to the competition? Is it to the EU coffers?

In any way, Microsoft will later be forced to contract business, as well as the inability to possibly fund this request by the EU Commission.

This next image is also a revelation that IE cannot be charged of being a monopoly product: Google Chrome has overtaken IE, with Firefox close behind IE. Even if Google or Mozzila had to pay a license to Microsoft, it still managed to create a better product, forcing Microsoft to rethink IE and make itself a better browser.

This would be the equivalent as Apple suing Microsoft for on being able to run their OS Leopard or Lion on any other hardware other than on Mac’s. Which is absurd, because Apple designed their OS specifically for Mac’s.

This is just another attempt for the government to rake in a substantial amount of cash for their dwindling budget. And, since the EU is giving away money to shore up the bankers reckless behavior, they would probably be able to bailout Cyprus with this money:

“The little island of Cyprus became the fifth European country to request a bailout for its struggling banking sector, and the estimated 10 billion euros needed to set things right would amount to more than half its total economy.”

I am sure to get the remaining 2 billion, the ECB will just lower some reserve requirement and get the desired excess liquidity. Wouldn’t it be interesting to see the possible statistical correlation of this possible expropriation and the bailing out of Cyprus? Wouldn’t be surprised if it brought on a p-value < 0,0001 in the tails of the distribution.