Original URL: http://www.theregister.co.uk/2006/07/12/microsoft_ec_fine_analysis/

EC vs. MS: IT depts find a champ in Europe

If nerve holds

By Andrew Orlowski

Posted in Operating Systems, 12th July 2006 20:14 GMT

Analysis The European Commission has scored the most meaningful victory in 15 years of litigation against Microsoft on both sides of the Atlantic.

It's not the fine itself. In financial terms, that's just a tiny dink on the back bumper - and barely a surface scratch. Microsoft can repay the $350m punishment in about as long as it takes a mature Windows XP laptop installation to resume from sleep: it's about three day's revenue for Redmond, which expects to make a $19bn profit this year.

Instead, it's the cause of penalty that should give at least one important part of the IT market plenty to think about. The EC is determined that Microsoft document its obscure server technology, and do so seriously enough for third parties to interoperate on level terms - and give the marketplace some renewed competition.

That narrows the scope considerably. So the ruling doesn't affect home users, who will see next to no impact. Business practices such as bundling and integration, and OEM contracts, all of which have featured prominently in past antitrust cases, aren't at issue, either. Real Networks, which like Novell was a key witness at one stage, has since settled with Redmond. No, this is purely about enterprise interop.

Microsoft calls its server technology its "crown jewels", but in fact, what's it's protecting is more paste than precious stone. At the core of what Microsoft protects most dearly is some unremarkable late 1980s technology based on Microsoft's implementation of DCE/RPC - which had its roots in the Unix wars of the time. Sharing files and printers, and basic network operations such as adding members - all of which are commodity functions. We're not talking about advanced file system features such as replication, let alone WinFS.

Microsoft was ordered to document the protocols in 2004, and its failure to produce adequate documentation resulted in the imposition of the fine today.

"I find it difficult to imagine that a company like Microsoft does not understand the principles of how to document protocols in order to achieve interoperability," an exasperated Neelie Kroes, the EC competition minister, said today.

Of course a commercial vendor can license the protocols, and hope for the best. In Luxembourg recently, Microsoft was keen to show that this could result in a happy collaboration. But it's difficult to compete effectively with the finished result - and impossible for an open source implementation to agree to the license conditions.

The key question now is who can benefit from the documentation Microsoft has failed to produce - and here the spotlight falls on software libre.

Before the court of the first instance, Samba's Andrew Tridgell held up that mythical device, the appliance server, as an example of the innovation that could return to the enterprise server business. But that isn't the kind of innovation that matters to IT users at this end of the business. It's rare to hear IT managers wishing for server appliances - but it's hard not to find one who didn't wish for reduced complexity. Opening the guts of Microsoft's software business is really about lowering prices, which are maintained at an artificially high level because of a monopoly supplier, for some very basic computer functionality.

The downstream effect could - and really ought to - concentrate minds at Redmond on Plan A, which was always about replicating functions found in expensive proprietary Unix systems and midrange systems and putting them on lower cost volume PCs. In recent years, it's been Linux that has been humming this tune.

All computer companies expect features to be imitated, and few companies can sit on features that weren't even new twenty years ago. The winners aren't just open source and its biggest backer IBM, but Microsoft's business customers.

But competitive advantage doesn't just come from copying, and joining the relentless race to the bottom. Microsoft might even try to innovate itself, rather than neglecting worthy and ambitious projects such as its on-off "future storage" project - last known as WinFS, and last seen heading for the deep freeze.

For the first time, then, we have an antitrust remedy that is not only being enforced - but might actually be able to restore some competition.

This supposes two things.

The first is that Microsoft is actually able to document these protocols adequately to the Commission's satisfaction - and there are people familiar with the protocols, and the documentation produced so far, who seriously doubt that Microsoft actually knows what's taking place on the wire. The second is whether Microsoft has the will to comply. Microsoft is already paying the fine into an escrow account, and this evening, Redmond lawyers were filing their appeal. Having played the antitrust poker game for so long, and discovered that prevarication is a successful tactic, the chances of it continuing with this gambit must remain.

What's $500m a year?®