Analyst: EU Misses Target By Aiming At Microsoft

A hearing over millions in fines that the European Union wants to impose on Microsoft wrapped up Friday as an analyst mused that the EU has missed the antitrust boat by badgering the American developer.

"Like most armies, the EU's fighting the last war," said Clay Ryder of the Sageza Group. "This would have been an important discussion 10 years ago." But not now.

Specifically, Ryder sees the EU's new noise about several features in the upcoming Windows Vista operating system as a case of taking aim at a target of convenience rather than the right mark.

"The issue is the [EU's] fixation on a platform with diminishing importance," said Ryder. "[The EU's] arguments are predicated on a platform, desktops and laptops, that will continue to diminish in proportion to the totality of information access devices -- PDAs, phones, iPods, game consoles -- deployed in the next few years. It's a completely different world than when the EU started its [antitrust] investigation. The laptop/desktop aren't the center of attention of consumers.

"I'd be far more concerned about what's happening with game consoles than Vista if I were the EU."Friday, Microsoft and the EU's Competition Commission finished a two-day hearing where Microsoft argued against a proposed daily 2 million euro ($2.4 million) for not meeting the mandate of a 2004 antitrust ruling. After the meetings, Microsoft's head lawyer told reporters he saw signs of a breakthrough on the often-contentious discussions about providing better documentation on Windows' inner workings to rival software developers.

Sources close to the EU, however, dismissed Microsoft's take, saying that the Commission wasn't backing off on its decision to fine the Redmond, Wash.-based company.

But no matter what the read on the hearings, said Sageza's Ryder, the EU's barking up the wrong tree.

"It's digital cell phones, game consoles, music players, and media centers that they should be worried about. That's the stuff that's growing [in use], not PCs," Ryder said.

"[But] Microsoft is a wonder target. It has all the political cards stacked against it. It's a Washington [state] company, not a Silicon Valley firm, and it's an American company. The Europeans hate it that such a successful company is American."And people hate a winner more than a loser. [Microsoft] is a winner, and that p***** off people. The EU would love to stick it to the U.S."

Ryder denied he had an ax to grind. "I'm not a Microsoft apologist. The company isn't perfect, far from it. But with Vista, Microsoft asked the EU in advance for feedback. That's the great irony here."

When the European Competition Commission confirmed last week that it had sent a letter to Steve Ballmer, Microsoft's chief executive, expressing concerns about four Vista features, it said it was only responding to a Microsoft request for guidance on possible antitrust problems with Vista, not beginning a formal inquiry.

"How does making Microsoft strip out these features help consumers?" Ryder asked. "If the EU required Microsoft to offer a version without these pieces, users will have to find third-party replacements -- or Microsoft's own -- install them, and make them work. That's just a lot harder on consumers."

The EU has specifically named Vista's digital rights management, its integrated desktop search, ability to create Adobe PDF-style documents, and planned bundling of anti-spyware software as the objectionable components.

"It's difficult at times to understand how this is really going to help the bulk of consumers," said Ryder."We don’t see equal outrage that most phones can't be taken from one mobile supplier to another in North America. Where is the demand for ease of third-party software installation on the iPod, PDAs, phones, and game consoles? These are the consumer platforms of the early 21st century.

"While regulators seem hell bent on defining what Vista will be, they may be overlooking the true growth area."