TCS Daily

No Bundle of Joy?

By Chresten Anderson - March 3, 2004 12:00 AM

The European Union's competition commissioner, Mario Monti, may soon demand that Microsoft sell two versions of its operating system, Windows, in the EU: one with MediaPlayer, its music and video software, and one without.

According to Monti and the European Commission, Microsoft is an abusive monopolist exploiting its dominating market position and putting rivals at a disadvantage.

The demand that Microsoft should sell two versions of its operating system is rather ridiculous since MediaPlayer may already be downloaded free of charge from Microsoft's web-site; the demand is especially problematic if -- as Microsoft claims -- the unbundling will cause Windows not to function properly.

But, of course, then Microsoft would no longer hold a competitive advantage. And that, apparently, is what Commissioner Monti calls competition.

The Commissioner is correct in arguing that consumers do not receive RealPlayer or QuickTime or other media software whenever they buy a new computer on which Windows is installed, but then they pretty much get at least one version whenever they buy a computer magazine. In any case, both programs are freely available on the Internet.

Monti's real concern is of course that Microsoft will drive its competitors out of the market and suddenly grossly abuse its monopoly power to extort enormous prices from victimized consumers. Perhaps Microsoft will even be able to quadruple the price of Windows. However, this charge is highly unlikely since Microsoft will not only face competition from an army of open source programmers that are certain to produce an alternative, but also from Apple, which thanks to its iPod is certain to remain in the market (one wonders when Apple will be forced to sell its iPod software separately!).

A much more likely scenario if the Commission succeeds in removing the disadvantage to Microsoft's competitors and forces the giant to sell two versions of Windows is this: Microsoft will be forced to sell the two products with a substantial price difference (since one must assume it is highly unlikely that Microsoft will be allowed to charge nothing or next to nothing for what is otherwise freely available for download).

Instead, next time I have to buy a new computer I will probably have to pay between €50-100 more for one with Microsoft MediaPlayer.

But this is not likely to be what I -- or anyone else with a decent Internet connection -- will do. Instead, we will go home, set up the computer, and spend a few minutes downloading and installing the software. While I will be really annoyed with Mario Monti, most consumers will probably be spending those minutes getting annoyed with "the greedy Bill Gates." That is unless, of course, Microsoft adds a small letter to its non-MediaPlayer version apologizing for the inconvenience and informing its customers that the malaise is courtesy of the European Commission, which required them to separate the two products.

But of course I should be happy that the competition commissioner is looking out for my interests and ensuring that I now have to spend either time or money getting what I already had.

Let's hope Monti isn't successful in forcing Microsoft to give up its intellectual property rights and reveal its source codes to ensure Windows will be fully interoperable with other products. The consequences of this drastic action are far more difficult to foresee, but they are equally unlikely to benefit us ordinary computer users.

Chresten Anderson is the founder of the Danish free-market think-tank Markedscentret.


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