Microsoft, the EU and Broken Promises
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News Analysis. Microsoft's unexpected pledge to keep "Interoperability Principles" suddenly makes sense, given the European Union's $1.35 billion fine against the company. |
[Editor's Note: This is the second of several posts started last week, but delayed because of reporting on Vistagate.]
I thought Microsoft was supposed to be making money in Europe, not writing big checks there. So far, Microsoft is on the hook for about $2.4 billion in fines. That's a whole lot of euros.
I'm not a conspiracy theorist, just to be clear. But my guess: Microsoft's Interoperability Principles announcement was a pre-emptive, defensive strike. This kind of thing has happened before, on both sides. Many splashy Microsoft interoperability announcements preceded major movement by the European Competition Commission, which also has used news announcements as a sword hacking Microsoft's credibility.
Surely, Microsoft lawyers had some idea that another fine could be coming. Microsoft played its interoperability disclosure hand before the European Commission put its cards on the table.
Make no mistake: This was a huge fine—about $1 billion more than the last one, which was already unusually hefty. The European Commission imposed both fines mainly for Microsoft's failure to disclose interoperability information.
But Microsoft's pre-emptive interoperability announcement raises uncertainty that the European regulators rashly acted. Did they? No.
Microsoft changed the rules with its Interoperability Principles, with respect to open-source software and the licensing of the company's intellectual property. That means that maybe (gulp) I was wrong when in October I wrote, "Microsoft bowed before the EU and took its whipping." Somebody crossed their fingers.
But that makes me right about something else: About three years ago, I first said that open-source licensing is a concession the company would never make—that Microsoft would pay the threatened $1 million-a-day fine before letting open-source developers freely use its intellectual property.
Microsoft hasn't given up that point after all, and I've got to assume the record fine shows how well the European Commission understands the situation. Microsoft's Interoperability Principles let open-source developers use the company's published protocols and other information for free only for noncommercial purposes. If developers release commercial products, either they pay Microsoft a royalty or their customers do. But somebody pays.
That licensing approach is inconsistent with the European Commission's position on protocol licensing and open-source or free software developers. Somebody tell me: Aren't there also incongruities between Microsoft's open-source licensing approach and the GPL?
The company is culturally predisposed against open-source principles. Microsoft's cultural intellectual property ethic goes back to the sometimes forgotten "An Open Letter to Hobbyists." In the 1976 document, Microsoft Chairman Bill Gates wrote:
"As the majority of hobbyists must be aware, most of you steal your software. Hardware must be paid for, but software is something to share. Who cares if the people who worked on it get paid? ... There is very little incentive to make this software available to hobbyists. Most directly, the thing you do is theft."
Remember, this is the company that claims open-source software violates at least 235 of its patents. Microsoft is going to protect its intellectual property from free, open-source distribution—sorry, but EU be damned—by whatever means necessary.
Recently, I've defended Microsoft in the ongoing "European Drama." But a $1.35 billion fine one week after Microsoft cleverly announced its Interoperability Principles was just too coincidentally to ignore.
As for Microsoft defenders who argue protection of intellectual property rights, there are none here. Like it or not, Microsoft is a convicted monopoly on the continent, where last year an appeals court lambasted the company perhaps worse than the European Commission in its March 2004 ruling. People can whine about it being unfair.
But there's nothing fair about business.
Related Posts:
- Defining Microsoft's Interoperability 'Principals', Microsoft Watch, Feb. 21, 2008
- Whose Principles Are They?, Microsoft Watch, Feb. 21, 2008
- The EU: Microsoft's New Taskmaster, Microsoft Watch, Oct. 22, 2007
- Microsoft's Open Letter to Open Source, Microsoft Watch, May 14, 2007
Comments (9)
Joe said: But there's nothing fair about business.
That's shrewd, but I get your point. Oh well, I think that there should be fairness in business, but that doesn't mean there is.
In the same way, there's nothing fair abo0ut Micro$oft's dirty business practices, but since there should be, the EU Commission is doing what it can to ensure that there is.
Micro$oft deserves to be fined. Now if only they could fine Bill and Ballmer personally, they just might change the way the company is being run.
That would be justice.
Posted by Maddog | March 3, 2008 3:25 AM
Chairman Bill Gates :"Most directly, the thing you do is theft"
SORRY BILL, YOU ARE THE THIEF (yourself definition)
http://www.google.co.uk/search?hl=en&q=microsoft+found+guilty+&btnG=Search&meta=
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Posted by Marco | March 3, 2008 9:01 AM
Some quote :
“A thief believes everybody steals.”
“A thief passes for a gentleman when stealing has made him rich”
Posted by Marco | March 3, 2008 9:11 AM
Again with the 1976 letter? It's 2008, for god's sake. That letter was about MS software's commercial being PIRATED not a statement about Open Source! Microsoft has always shared sample code, programming examples in source code form, but the products are commercial.
Microsoft Basic was not open source, it was a product sold, not given for free. This letter has nothing to do with ethics and principles! We already know Microsoft is a commercial software company, just like Apple, Adobe and thousands of other company.
It's REALLY lame, by the way, to try to establish the character or position of any entity by pulling quotes from 22 years ago. I wonder what YOU were saying 22 years go? I guess you never changed your position on any subject since then?
Posted by ulric | March 3, 2008 9:56 AM
It's even worse. The letter was not 22, but 32 years ago.
This letter is an historical documents that reflects an era when programmers were trying to make money making tools for other programmers.
There was nothing wrong with this. There is nothing wrong with this today either, although it's gone out of fashion for most things. It's still around : Adobe still sells AIR.
I can't understand how a journalist can fail to interpret the meaning of documents like this and attempt to give this document another meaning. The full spec for DOS and other APIs were completely public and documents. This letter was about making copies of a commercial software.
Posted by ulric | March 3, 2008 10:05 AM
Funny that in 1976 Gates took such a stance, when for decades MSFT turned a blind eye to copyright infringement of it's products in developing countries. Gates didn't care if they used infringed product, as long as it was MSFTs.
Posted by Al | March 3, 2008 11:44 AM
Quoting Joe Wilcox;
"Remember, this is the company that claims open-source software violates at least 235 of its patents. Microsoft is going to protect its intellectual property from free, open-source distribution—sorry, but EU be damned—by whatever means necessary."
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Joe, I guess I don't completely understand this statement too well. It is taken out of context to the larger article, it doen't quite make sense to me. Perhaps you could explain it better?
Why, because the EU's hammer seems to be a lot bigger than the one MS holds. In the end, MS will bend to the will of the EU, as we now start to see a pattern of escalating fines. How much will the next fine be, 5 billion? You get the idea. Also, the EU has other powers, they can raid, shut down, MS offices in member countries. They can make the software illegal to sell. There is a point where MS must comply, or stop selling in the EU. And there is no way they will stop selling in the EU.
Also the fact that MS dropped some prices on Boxed standalone, full versions of Vista, tells me that those sales have most likely fallen from the 20% margin they started with. Which should show OEM's that Vista is a flop with those building their own systems, or upgrading.
Posted by chips | March 3, 2008 12:06 PM
"This letter is an historical documents that
reflects an era when programmers were trying
to make money making tools for other programmers."
No, it was definitely not. It was an era of people writing and sharing software and ideas. And then someone comes along and sees a lot of money to be made (which is OK) but then equates sharing with theft (which is definitely not OK).
My next door neighbor is retired and has hip problems. He has slowly reduced the amount of grass he has to mow by replacing it with mulch, rock gardens, and stone paths and patios. I edge his yard every time I edge my own so he doesn't need to pay for a lawn service for this remaining yard chore. Are we thieves because we deprive professional lawn service companies from making a profit on his lawn work? Billy Boy thinks so. Billy Boy is wrong.
If Billy Boy's legal team wishes to contact me for non-commercial purposes, that is OK. But if they wish to use my personal communication protocols for commercial purposes, they owe me a $15B pre-paid license fee for the right to do so.
Posted by Philosopher | March 3, 2008 11:17 PM
Big fines are not going to hurt Microsoft, if anything the fines will be passed on to you the consumer..and the stock holders will suffer.
However the only way MS is going to suffer is by companies, government agencies and governments moving to open source....and that is starting to happen right now. There is too much competition now to go back to the glory days of the early to mid 90's when MS pretty much ruled the roost.
A good example is Vista....Vista wasn't the problem, it is the symptom of a much larger problem and that problem is that MS seems to have forgot who their core customers were. Incorporating DRM into Vista did not benefit the consumer or its key corporate customers, but rather the entertainment industry.
A company cannot forget about the customer, that customer will soon look elsewhere, and that indeed happened. Apple and Linux are doing quite well now. Firefox is gaining more users each day in record numbers (1/2 a billion users in four years).
Open Office has taken off like wildfire. Winamp is replacing Windows Media. Bloated, slow running, expensive are out, quick, sleek and inexpensive are in.
Microsoft's best bet for getting out of the EU problems is simple. Allow or insist on having Linux installed (and fully operational) on every computer (world wide) that comes with a Windows operating system. Also bundle Opera, Firefox, Open Office with both the Linux and Windows OS.
If MS went with this deal, chances are a lot of their problems could go away and go a long way to help silence their critics.
Would it happen? In 1998 it wouldn't, but in 2008? It could be a possibility....
Posted by Ralph | March 5, 2008 8:39 AM