Red nose day at the Commission

David Mitchell, Practice Leader

The European Commission has issued a Statement of Objections to Microsoft, for failing to comply with its March 2004 decision. Competition Commissioner Neelie Kroes said, 'Microsoft has agreed that the main basis for pricing should be whether its protocols are innovative. The Commission's current view is that there is no significant innovation in these protocols. I am therefore again obliged to take formal measures to ensure that Microsoft complies with its obligations.' This brings the prospect of further fines being levied on Microsoft.

It is interesting that innovation is at the root of the Commission's latest statement - at least this is following industry fashion!

However, the real innovation is in the outcome and in the justification of it. If the logic is to be followed then the Commission had better start recruiting and acquiring lots of new office space. If it is taking on the role of arbiter on whether IT is innovative enough to protect then it must pursue this process with a huge proportion of companies in the entire industry. This will require initiating thousands of cases that will increase the utilisation of legal firms in Europe and elsewhere. On this basis, it is going to need a lot more staff and the offices to house them.

I have said before that this case was taking increasingly bizarre turns and that it needed to be brought to a rapid conclusion. The process could only be more farcical if the European Commission made its next announcement in a clown suit, complete with big red nose and ridiculously large shoes.

As a strong supporter of the overall European initiative, I can only look on this decision with shame. It will tend to make the European market look unattractive, protectionist, and a place that should be avoided by thriving new technology companies. The European Commission is damaging the prospect of the European economy and the European Parliament needs to intervene to bring sense to the situation.

I have conducted a straw poll since the latest Commission announcement, talking informally to a dozen software and IT services companies in Europe. Not one of these would start IT companies again in Europe, given the current climate created by the Commission. Oh, and the annual revenues of these companies add up to more than half a billion Euros. Draw your own conclusions by extrapolation...

David Mitchell is Ovum's Software Practice Leader, managing the Software@Ovum advisory service.