EU Microsoft punishment should fit the Bill

IN A PREVIOUS article about the "buffer overflow" problem I stated that with 15 years of experience behind them, the security of Microsoft's software was still very poor. It is tempting to direct all our ire at that company but this would be unfair, because blame also lies with the US government and its laisez-faire attitude to Microsoft's position in the industry.

Since the early days of personal computing, Microsoft has held the dominant position in the industry, first through DOS and then through Windows. The only opposition has come from Apple but its foothold in the market has rarely exceeded 5% of total sales.

It is more than just a dominant position that Microsoft hold because it has a track-record of buying companies that produce competing applications software and then killing off some of the products and reducing the choice for consumers.

The "browser wars" were a minor variation on this theme, because it bundled Internet Explorer with Windows in order to make it extremely difficult for its competitors.

There is no denying that this is part of normal capitalism but I would argue that it has exposed a fundamental problem which comes when governments put capitalism first and their citizens second, namely the problem of a lack of competition leading to inferior products and services.

The lack of strong consumer laws in the USA and the lack of any "competition" authority with teeth have allowed Microsoft to dominate the industry with software that has inferior security. More than that, the government has never done more than pay lip-service to the notion of competition and predatory practices.

The recent punishments to Microsoft over the bundling of software are nothing more than a gentle tap on the wrist. Allowing Microsoft to pay its penalty by offering software at a reduced rate in certain states is ridiculous because it is Microsoft which sets the price of that software.

For the 12 months ending June 30 Microsoft had total operating earnings of about $13 billion which came from spending almost $19 billion. This means that for every dollar that Microsoft spent on its operations it gained 65 cents profit. Providing vouchers so that aggrieved citizens of certain states can buy software from Microsoft at a discount is an absolute joke because this will have a minimal effect on a company with these levels of profit.

In the last few weeks we have seen the effect of yet more vulnerabilities in Microsoft's products and estimates of the cost of these viruses run into several billion dollars, exceeding the cost of last year's set of viruses which also took advantage of Microsoft's poor security.

There is no good reason for Microsoft to care because the EULA (end user licensing agreement), to which the user must agree before using the software, states that Microsoft cannot be held liable for any damages that its software causes. And the lack of strong laws to protect US consumers allows this situation to continue.

This would not arise in countries where strong consumer laws exist and where competition authorities have sharp teeth. In theory these countries could do a lot to make Microsoft clean up its act, but the reality is that without the involvement of the USA and its large consumer society, other governments are left almost powerless.

All this could change soon if the EU is prepared to show it is serious about its citizens and the rights of consumers.

The EU is still considering an appropriate form of punishment for Microsoft's practices and this latest spate of viruses should have made them very aware of the consequences of Microsoft's actions. The difficulty with punishing Microsoft is that it has been allowed to operate without constraint and has built up enormous cash reserves -- insulating it from anything but the most draconian fines, fines that Microsoft would of course challenge because they are draconian.

The EU could address these matters not by fining Microsoft, but by making a sizable grant to the Linux community and encouraging the use of Linux on the desktop as an alternative to Windows. Even better, it could define that the grant be used specifically for improving the security of Linux and preventing the notorious "buffer overflow" problem.

With good security and increasing use on the desktop, Linux would be a serious competitor to Microsoft, and be a competitor that cannot easily be targeted by their previous practices. This would pressure Microsoft into improving the quality of its product and ensuring that the level of quality continued in future years.

Regardless of whether the consumer stayed with Microsoft products or moved to Linux they could be assured of a reliable and secure platform on which to work. And you can't tell me they would be unhappy with that. µ