EU Ruling: Microsoft paying a steep price?

amcpherson's picture

News travels fast that an EU Court has ruled in favor of the European Commission against Microsoft. While we are happy with this decision and are looking forward to a more transparent and open Microsoft, I have to chuckle at this headline:

Microsoft Suffers A Blow And Pays A Big Price

Does he mean the nearly $1 billion in fines that have levied against them in the last few years? While it sounds like a lot, Andy Updegrove breaks it down very well here:

While today’s judgment is significant, it is worth noting that the penalties that Microsoft has incurred to date – roughly $1 billion, plus an obligation to reimburse a far smaller amount of legal fees – are minute in comparison to the size of the profits it has garnered over the ten-year investigative period. During that period, its market share in both of the subject markets has grown dramatically. As a result, while Microsoft has nominally lost in court, it continues to win at the bottom line, given that the only impact on its products to date has been more symbolic than effectual requirement that it offer a version of Windows that does not bundle a free copy of its media player.

Stated another way, a billion dollars spread over ten years is $100 million a year. During the same period, Microsoft revenues have grown enormously, to over $50 billion a year, fueled primarily by the continuing growth of its operating system and Office products. It has been a tiny cost of business indeed, and a shrewd business decision, to incur a liability to pay one fifth of one percent of annual gross revenues to retain the freedom to exercise the dominance of so lucrative a market.

In fact, since every year their monopoly is extended means another $50 billion, it doesn’t take a business degree to figure it why Microsoft acts the way they do. Unfortunately for them, customers increasingly have a choice. They can choose freedom via open source and open standards (Linux, Open Office and ODF) or continue with Microsoft and pay, through their licensing fees, the price of these penalties.

We hope this decision forces Microsoft to meaningfully support open standards and true interoperability. Customers are not letting them get away with the same tactics they once did. (Witness the OOXML defeat.) Instead of calling something open, make it open. Instead of talking about interoperability with one company, meaningfully work with developers like the Samba team or multiple vendors in a neutral setting, so people can interoperate with your products.

It will be interesting to see just how this will ruling will play out.