Court orders Microsoft to stop selling Word

In his December 22, 2009 blog article "Microsoft Word sale prohibited as of Jan. 11, fix promised," Christopher Null reports that a U.S. federal court has found Microsoft in violation of patent law. This is another example of how some corporations abuse their market power to the detriment of consumers. Most economists agree government regulation is necessary to achieve more desirable social outcomes when there are market failures, such as a lack of sufficient competition.

Office workers of America, enjoy your Christmas break. Because come the new year, things could get a little hairy around the office. Microsoft Word is now scheduled to be prohibited from sale beginning January 11, 2010. That's less than three weeks away. The good news: Microsoft has promised a fix, one which will be rolled out before the deadline arrives.

If you don't understand, you might have simply missed this story, or dismissed it as something that Microsoft would ultimately use its considerable clout to have pushed under a legal rug.

But it's no joke. In August of this year, a court sided with a small Canadian company called i4i that holds a 1998 patent on the way the XML language is implemented, finding that Microsoft was in violation of that patent. The result: Microsoft was told to license the code in question from i4i or reprogram it, or else Microsoft Word would have to be removed from sale in the market. The original ruling gave Microsoft until October to get its legal affairs in order, but appeals pushed that out a bit.

Now a federal court has upheld that original ruling -- plus a fat, $290 million judgment against the company -- imposing the new January 11 D-Day on the matter. Microsoft Word and Microsoft Office will both be barred from sale as of that date -- though naturally you'll still be able to use copies of Word and Office that you already own, and Microsoft will be allowed to keep supporting those copies.

Unless Microsoft ships the promised technical workaround very quickly, things are going to get extremely dicey in the computer world, and fast. Not only will retail outlets selling shrinkwrapped copies of the software be affected, computer manufacturers (who complained loudly about this injunction when it was announced) who bundle Word and Office on the computers they sell will also be seriously impacted by the ruling.

There's always a chance things will change again as the January 11 deadline approaches, but if your company requires Word or Office to keep operations running, it might not be a bad idea to stock up on a few extra copies now.

EU drops Microsoft browser charges

In the December 16, 2009 article "EU drops Microsoft browser charges," Associated Press business writer Aoife White reports:

BRUSSELS – The European Union has dropped long-standing antitrust charges against Microsoft Corp. after the company agreed to give users of the Windows operating system a choice of up to 12 other Web browsers.

Under the terms of the deal with regulators announced Wednesday, Microsoft will avoid further EU fines if it provides a pop-up screen that lets European users — from March — replace Microsoft's Internet Explorer or add another browser such as Mozilla's Firefox or Google's Chrome. Internet Explorer is used by a majority of global internet users.

The deal will also allow computer manufacturers to ship PCs without Internet Explorer in Europe.

Neelie Kroes, the EU's competition commissioner, claimed the deal was an "early Christmas present for more than hundreds of millions of Europeans" who stood to benefit from having "effective and unbiased choice" between Microsoft's Internet Explorer and competing browsers.

"The (European) Commission has resolved a serious competition concern for a key market for the development of the Internet," she told reporters.

"It is as if you went to the supermarket and they only offered you one brand of shampoo on the shelf, and all the other choices are hidden out the back, and not everyone knows about them," she said. "What we are saying today is that all the brands should be on the shelf."

Microsoft general counsel Brad Smith said the company was pleased with "final resolution of several long-standing competition law issues in Europe" and looked forward to building "on the dialogue and trust that has been established between Microsoft and the Commission."

Wednesday's deal comes after more than a decade of EU antitrust action against the world's biggest software company that has already seen it pay euro1.7 billion in fines.

Microsoft is not totally out of the woods yet, as it was warned it can still be fined up to 10 percent of yearly global turnover without regulators having to prove their case if it doesn't stick to this commitment for the next five years.

Kroes confirmed she was still looking at complaints from software rivals that the company wasn't sharing key information that help others make products compatible with Microsoft software.

In January, the EU charged Microsoft with monopoly abuse for tying its browser to the Windows operating system software used on most desktop computers — this, they said, was an "artificial distribution advantage" that rivals didn't have.

Kroes said a lot of Internet content was specially adapted to Internet Explorer. since the browser was present "on virtually every PC in Europe." Other software makers complain that this caused technical problems that made it hard to use other browsers.

The EU said Monday that a pop-up choice screen would eliminate those concerns when it is downloaded as an automatic update to all users of Windows XP, Windows Vista and Windows 7 in Europe who have Internet Explorer set as their default browser. Other users will be asked if they want it.

The choice screen will list the 12 most-widely used Web browsers running on Windows — listing five prominently. Users can pick and download one or several of them, choosing from Apple's Safari, Chrome, Internet Explorer, Firefox, Opera, AOL, Maxthon, K-Meleon, Flock, Avant Browser, Sleipnir and Slim Browser.

Some 100 million computers will likely display the screen by mid-March and around 30 million new computers will show it over the next five years, the EU said.

People can keep Internet Explorer if they want — but they will for the first time be exposed to other browsers, providing a massive new audience to many smaller browser makers.

The choice of browsers will be updated every six months on the basis of several independent sources of market share information.

Microsoft will report back regularly to the European Commission, starting in six month's time, on how the rollout of the screen is going — and could make changes if the EU asks. The EU is also able to review the entire deal at the end of 2011.

Microsoft will also provide more information to help software developers make products compatible with Windows, Windows Server, Office, Exchange and SharePoint and will publish what the EU says is an "improved version" of an offer that Microsoft first made in July.

The EU says it is still investigating whether Microsoft is holding back some of the key data that developers need to make products that work with its software.

Regulators said they welcomed Microsoft's move but that the offer was still "informal" and wouldn't end their probe. But they offered some hope saying they would "carefully monitor the impact" of the deal on the market.

Thomas Vinje, a lawyer for browser company Opera and the European Committee for Interoperable Systems, said it was "not yet clear" that Microsoft's offer would create "a more level competitive playing field where open source software is not subject to Microsoft patent fear uncertainty and doubt."

Vinje helped file the complaints to EU regulators that triggered the investigations into Microsoft's browsers and interoperability sharing.

On The Net
http://www.browserchoice.eu.

The Web Browser Competition Between Microsoft and Netscape is an Example of the Failure of Unregulated Markets to Provide Socially Desirable Outcomes

In the June 18, 1999 Salon article "Web wars
Did Bill Gates beat Netscape fair and square?," Andrew Leonard describes how Microsoft used its market power to unfairly defeat Netscape in the market for web browsers. This is an example of how unregulated markets lead to some undesirable outcomes. Market power may allow one company to dominate a market in a way that is adverse to the interests and benefits of consumers and the general public.