Microsoft versus European Union - Anti Competitive Behavior or Competitive Advantage - Case Study Example

?Introduction The concept of anti – competitive behavior and competitive advantage among businesses is one that is defined specifically with components that are a part of each business and the regulations which are followed. In the case of the European Union vs. Microsoft, there was a specific allegation that Microsoft held a competitive advantage over other competitors, leading to a monopoly within an international framework. In the case that followed in 2004, there was the decision that Microsoft needed to disclose information that would allow rival vendors to interoperate with Windows. The decision was followed with the understanding that the information should be non – discriminatory and reasonable for vendors to understand the information which Microsoft held. To further the regulations, a mediator was assigned to Microsoft to disclose the information and change the disclosures. This included technical advisors and those who would perform market tests. The information was based on Article 24 (1), which stated that Microsoft was obliged to reveal specific amounts of information about the functioning within the company. By 2008, Microsoft had not complied with the regulations, leading to a fine of 3 million per day and a total of 899 million for non - compliance (EU, 2011). The question which has arisen is whether Microsoft was anti – competitive or had a competitive advantage, as well as what the decision of the EU was and how it has led to a change in the competition within Microsoft and other vendors. Description of European Union Microsoft Case The beginning of the endeavor from Microsoft vs. the European Union came from a complaint left by Sun Microsystems. The complaint was based on Microsoft not revealing information that should be made public in terms of the PC operating system and overall functioning. The system that was complained about was furthered with information that wasn’t provided to vendors about the Microsoft Windows Media Player Product. The investigation which followed stated that Microsoft denied revealing specific information about the products, which allowed them to dominate the market while other vendors remained at a disadvantage because of the information which was not disclosed. The belief was that Microsoft had become involved in becoming anti – competitive, specifically because of the lack of information available to the public about the media player and operating system of Windows. The problem which arose was based on vendors not being able to create products that would compliment and intertwine with Microsoft. This continued with the competitive advantage that allowed Microsoft to dominate the market and the different aspects of operating systems that were associated with this (EU, 2011). The behavior of Microsoft reached a verdict of being anti – competitive and didn’t comply with Article 24 (1) and (2) with not supplying vendors with information. This is noted to be anti – competitive because every vendor is required to supply specific information to the public. If the competition did have the information, then it would have remained a part of the competitive field and would have allowed other vendors to use the same information or create complimentary software systems. However, without revealing the information, vendors don’t have the capacity of making systems that comply with the Microsoft Windows operating system. This leads to the inability for other vendors and suppliers to create open source products or software systems that can be used on the operating system, which is currently dominating the world market with computers. The result is a monopoly that allows Microsoft to continue to leverage the main consumer demand of cheaper and efficient operating systems without having other software or vendors that can compete with the product or create alternative products. The decision is shown best with the Apple competition, which is unable to create the cheaper models and software systems but which doesn’t have the information from Microsoft to become competitive in the field. This allows Microsoft to remain competitive and to remain ahead with the products which they offer (Elgan, 2009). From the viewpoint of Microsoft, there is the viewpoint of having antitrust with the decision which occurred. If information is revealed about the products and services offered through the operating system, then a vendor can easily copy this and begin to sell the idea outside of the operating system. There may also be the ability to create open source alternatives for individuals, which would lead to a loss in profit for Microsoft. The dynamics of operating systems and technology would lead Microsoft at a disadvantage because of the way in which individuals could work with the technology and operating systems that are offered by the corporation. The viewpoint of Microsoft was one which was reliant on not disclosing the information so they could keep their products safe and without complexities in others stealing or using the products and systems that Microsoft created (Groklaw, 2011). Evaluation and Analysis The approach which was taken toward Microsoft holds both strengths and weaknesses with compliance to anti – competitive measures and the approach taken toward the company. The European Union holds a variety of legitimate points with Microsoft and the approach which was taken toward anti-competition. The first is based on the monopoly that has developed through Microsoft, despite the product standards that are met. A lower price and the inability to have efficient operating systems are some of the known components that Microsoft is known for. However, they continue to dominate the market because of the monopoly which has been created and the non – disclosure which they have conveyed to vendors. This type of anti – competitive nature is one which becomes unjustified because of the lack of basic documentation that would help the products to become better through complimentary means or which would widen the diversity of products that should be made available to those who are looking at PCs and servers. The approach taken then leaves consumers at a disadvantage with products available because of Microsoft’s unwillingness to disclose specific information. It also leaves other vendors at a disadvantage because Microsoft holds a monopoly but complimentary software systems and other aspects aren’t available to the public. The result is that the multinational business is unable to create a fair marketplace for the operating system which is used (George, Dymally, Lacey, 2004). The lack of competition, monopoly created and the problem with consumers not receiving a fair product are only some of the complexities with the case. This is furthered with the viewpoint of the European Union and the approach toward the economic structure and needs that are associated with the economy. The health of the economy is the primary concern of the European Union, specifically because there is the need to maintain high – income countries while helping with the development of other countries in Europe that need to continue to develop. Without having this approach, there is the inability to help each of the areas to flourish so the economy is balanced and maintained. The existence of monopolies and the inability to have competition from vendors causes the health of the economy to stagnate and causes imbalances with the overall health of each of the nations. The importance then becomes based on intervening with capitalist types of businesses so competition can assist with the boosts in the economy. If vendors are able to create complimentary software systems for the different needs in the community, then there is the ability for the health of the economy to advance in the European Union as a whole. Without this, is continuous stagnation that occurs with the development of each of the nations (Suhrcke et al, 2005). The concept that the European Union has approached with the health of the economy, as well as the dynamics that the non – disclosure has created is further regulated by the stipulations that have been used to make the decision fair to Microsoft. The decision to disclose information to vendors and the public was followed by mediation of both technology and marketing that would have protected Microsoft from harmful outcomes and which have caused loss in profit or in the protection of the business ideas that have flourished through different time frames. While there needs to be a personal flow of data between different vendors and companies, there is also a sense of protection for Microsoft so there isn’t information that is disclosed that would harm the business prospects or growth of the business. The data that is given to the public can only be processed if it is given consent, holds public interest and has legitimate interests of individuals that may be looking at the Microsoft information. These stipulations would continue to protect Microsoft while disclosing information and balancing the economy. This shows that there wasn’t a privacy interest with the decision for information to be disclosed and that Microsoft was remaining at an anti – competitive state with the decision to not provide basic data and information to the public (Smith, 2002). Even though the European Union has created regulations and understanding toward the demands of a business to create equality in the economy, Microsoft also has some areas of misunderstanding and disadvantages in terms of the decision made by the European Union. The first is with the business structure that Microsoft operates under. The main station of Microsoft is in the United States, specifically which doesn’t have the same acts toward competition and the expectations that are associated with a business. If Microsoft begins to disclose information from the European Union, then it affects all others with the multinational company. Misunderstandings with the expectations of disclosing information are followed by this, specifically because operations come from the United States, as opposed to the European Union. From the viewpoint of Microsoft, this creates more complexities, specifically because of the inability to establish and develop the same policies in different regions. The concept in the United States follows a vertical agreement that shows that Microsoft is likely to harm competition. In this instance, there is no evidence of this vertical agreement being in place. More important, the EU doesn’t apply this agreement, causing Microsoft to go against the basic regulations that are in the United States. The complications with regulations between nations then become one of the imbalanced problems between Microsoft and the EU (Cooper et al, 2006). A second concept that is associated with the needs of Microsoft and which shows the main imbalance comes with the decentralization and dominance which the EU has over the company. The anti –competitive act that Microsoft is falling under is one which is built on the regulation of a government authority over a business. The basis of Microsoft in the United States shows that this is not a legal aspect of handling business and leads to complexities with disclosing information through government regulations. The decentralization that comes from this is based on Microsoft not being able to control and monitor the information which is disclosed while causing the mediators to have control over the information disclosed. From this perspective, Microsoft becomes unable to make decisions about the information and data which is retrieved to the public. This could cause a loss in controls over the success of the company and may create a sense of dominance over the governmental authorities, as opposed to allowing the free will of the company to become the main aspect of the government. The concept of authorities overcoming the decision making process of a business then becomes controversial, specifically with the question of who should hold the powers and how much should be available within the corporation (Wilks, 2005). The concept of political dominance is one which becomes furthered with the ideologies that Microsoft holds toward the products that are available. The nature of software and operating systems is one which becomes controversial because of the capacity of copying the information and creating middleware in the market as well as open source software. If this falls under the Microsoft copies then it makes the company liable to the middleware that may not be associated with the company. Losing controls over the data and information of Microsoft then becomes detrimental to the company. Consumers may lose the trust and reputation for Microsoft and the company would easily lose the market which has been built within the business in terms of making the operating system one which offers cheaper and efficient solutions. The concept of anti – retaliation comes into the picture, specifically with Microsoft resisting the demands of the government to protect the changes which would occur within the corporation in terms of middleware and the inability to control the databases that would be available to other vendors. For Microsoft, this business move would not only leave them at a disadvantage, but could cause a loss in the reputation and success of the company because of other vendors having access to data that may not be used correctly (Cohen, 2004). Conclusion The concepts associated with the European Union vs. Microsoft shows a strong stance on both sides in terms of the relationship of the business to the governmental influences. From the viewpoint of the EU, there is the need to regulate the economy and offer equal and fair value to other vendors that are within the European Union. This is followed by the understanding of Microsoft holding a monopoly over operating systems and software without the ability to evolve because of the decision to not disclose information to others. The viewpoint of the EU is one which shows a specific need to work with other vendors and the economy of the countries to continue to develop and evolve. Even though this viewpoint is one which complies with the need to have information disclosed, the viewpoint of Microsoft creates a sense of complexity with the case. This is based first on different concepts which are initialized in the United States in terms of disclosure of information. If this is altered because of the EU, then Microsoft remains at a disadvantage as a multinational company. This is followed by disadvantages which are based on not being able to control the products and data as well as not having access to the potential liabilities which would occur. Each of these viewpoints creates a need to re-evaluate the position and find an agreement that allows both the government and Microsoft to have an advantage over the specific needs and agenda for the products that are currently offered. References Arnam, RC. 2001. “Business War: Economic Espionage in the United States and the European Union and the Need for Greater Trade Secret Protection.” NCJ International Law and Commerce Regulations 51 (3). Cohen, A. 2004. “Surveying the Microsoft Antitrust Universe.” Berkley Technical Law Journal 51 (3). 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