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Sunday, 16 July 2006 18:46

Not much user sympathy for Microsoft over EU fine

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As much we would like to deny it, there is a certain amount of antipathy in some areas between the US and the EU these days. One of those areas is perceived US technology monopolists such as Microsoft and Apple. However, unlike Apple, the reaction of the general public to recent the European Commission (EC) action of fining Microsoft is not winning the software company much sympathy from users.

Microsoft was fined about US$357 million last week by the EC for failing to diminish its software monopoly in a timely fashion, bringing the total of EU fines against the software company up to around US$1 billion since 2004.

It seems that more than a fair share of Microsoft financial statements in recent times has included some sort of settlement affecting the company's bottom line. That of course does not include the legal fees that Microsoft has been forced to pay out to keep its many litigants at bay, plus the teams of specialists it employs solely to satisfy the requirements of antitrust regulators in the US and EU.

Only a company with an enviable bottom line like Microsoft's could afford to withstand such sustained financial hostility and still retain a robust and growing bank balance.

Perhaps it is Microsoft's demonstrated resilience and seemingly impervious financial position that is behind the results of the latest iTWire poll, which appears to show that a clear majority of readers believe the EU is acting fairly in fining Microsoft recently.

The iTWire poll asked: "Are EU antitrust regulators being overly zealous in prosecuting Microsoft?" Of the respondents, 69.2% answered no, 30.8% answered yes. The clear implication is that more than 2 out of 3 readers who bothered to respond to the poll believe that Microsoft is getting what it deserves from EU regulators.

The response was in stark contrast to an iTWire poll last month which asked the question: "Should Apple be forced to make iTunes compatible with portable players other than iPod?" Of the respondents, 56.4% answered no, while 43.6% answered yes.

Both Microsoft and Apple built their dominant market positionsin the face of stiff competition.

When Microsoft was a minnow, IBM was considered an unassailable giant. Microsoft changed the computing paradigm.

When Apple was in the wilderness for more than a decade, pirate MP3 downloads proliferated and the MP3 player market was well established. Apple created iTunes and iPod and changed the paradigm to legal downloads.

So why the difference in reaction to the treatment of Microsoft's desktop platform monopoly from EU regulators and Apple's music store platform monopoly from French and, soon to follow, Scandinavian regulators. Are what the companies doing so different?

The answer possibly lays in the fact that there are many Microsoft users out there who currently resent the fact that they're being forced to pay through the nose for software that they're locked into which is malware prone, requires costly support and constantly requires updates and extra security software just to keep it safe from unwanted intruders.

What's more, users keep getting promised a whizz-bang new version that is always a few months away, but never seems to be materialize. 

When it does finally materialise, they will once again have to pay through for the nose not just for the new software but also the new hardware capable of running it.

The near monopoly that Apple has created appears to be quite different. Against well established competition, Apple has created an online music store that has forced music companies to allow consumers to download single music tracks at fair prices.

Because of the thin margins for Apple, the company does not make much on the store. However, being a hardware company that specialises in design excellence, it has created a phenomenally popular music player device designed to operate exclusively with its own store.

If users choose not to, they can buy another music player and download music from other stores. It's their choice and they'll be able to hear exactly the same music at similar prices. However, most consumers choose not to because they like the Apple product and have no objection to being locked into its business model. In fact, Microsoft plans to duplicate it.

So the question again, is why do people feel sympathy for Apple in its fight against EU regulators and not for Microsoft? Perhaps it's because Apple so far has delivered excellent products for music listeners, while the same cannot generally be said for Microsoft.


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Stan Beer

 

Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

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