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Microsoft got 'bell rung' by ruling ; Tech veterans say decision against software giant was overdue

Posted on: Thursday, 25 March 2004, 06:00 CST

Hartmut Sell knows that the European Union's $613 million fine for antitrust violations at Microsoft Corp. means little to a company with more than $50 million in cash reserves.

But Sell, who runs a small computer store in downtown Berlin, relished the punitive spirit of Wednesday's EU ruling against world's largest software maker.

"It's about time that Microsoft got their bell rung," Sell said.

From Silicon Valley executives to Belgian bureaucrats, technology industry veterans around the world said the EU's ruling was overdue comeuppance for Microsoft -- even if they remained dubious that the company would change its business strategy to comply.

The EU's ruling was far harsher than the antitrust settlement in the United States, where an appeals court overturned a 2001 decision that Microsoft must be split into two companies and must remove its Web browser software from the Windows operating system.

If the EU orders are upheld, Microsoft would be forced to share software code with rivals and stop bundling some programs into Windows.

"Microsoft is going to be recalcitrant and reluctant, and getting them to follow the new rules will be like pulling teeth," said Ed Black, president of the Washington-based Computer & Communications Industry Association, which filed another lawsuit last year against Microsoft.

"My hope is that as Microsoft attempts to vigorously undercut these orders, EU regulators will say, 'That's it. Next time you come in front of a judge, we're not giving you another chance.'"

Industry veterans -- particularly in Silicon Valley, where many executives are openly hostile toward Microsoft -- said the EU's punishments wouldn't likely dent their longtime nemesis.

"Microsoft will probably respond by raising prices on the software it sells in the EU to compensate for the additional risk of fines in the future," said Brian Behlendorf, founder of CollabNet Inc., a Brisbane-based open-source software and consulting company.

He said requiring Microsoft to sell operating systems without a media player won't thwart the company, and he's asked regulators to strip Microsoft of its patents.

Bruce Perens, a Berkeley-based consultant and a founder of the open-source movement, said antitrust commissioners must strictly enforce the EU ruling -- which stated that Microsoft's "illegal behavior is still ongoing."

"This ruling shows that the U.S. settlement was a sham that had absolutely no deterrent on the behavior of a twice-convicted monopolist," Perens said. "There needs to be continued scrutiny in the EU, United States and around the world. Without very close scrutiny, Microsoft has shown that it will not change its behavior."

Others say letting the case fester in appeals could have disastrous consequences. By the time Microsoft settled its antitrust case with the U.S. Justice Department, the Internet browser war between Microsoft's Internet Explorer and Netscape's Navigator that precipitated it had ended -- and Microsoft won.

"The slowness of legal process is a big problem," said Alan Cox, a deputy to Linux project leader Linus Torvalds. "Antitrust action tends to occur after the murder was committed, so to speak."

Executives at Santa Clara-based Sun Microsystems Inc., which complained to the EU in 1998 that Microsoft software was incompatible with Sun servers, worried about a lengthy appeal. Sun would need to see Microsoft's code a year before it could begin selling new servers, said Lee Patch, Sun's vice president of legal affairs.

"Is a stay appropriate after Microsoft prolonged these proceedings five years already? I think not," Patch said. "There's an urgency to this matter that goes beyond Microsoft's interest -- it goes to consumers and industry."

Haakon Wium Lie, chief technical officer at Opera Software ASA, a Norwegian maker of a competing Web browser, said the EU penalty -- if enforced -- could improve competition.

"If this is a first step, then it is good," Lie said. "If this is it, it is not enough."

Microsoft's steep licensing fees are causing many countries -- particularly cash-strapped nations in Asia and Latin America -- to install open-source software, often freely distributed on the Internet.

China is installing the Linux operating system instead of Microsoft Windows on desktop PCs in government agencies and universities, and open-source programs for servers have become popular in corporations worldwide.

Matthew Szulik, head of open-source software company Red Hat Inc., said he wasn't surprised the newest sanctions came from Brussels, not Washington. Foreign countries are embracing Microsoft alternatives faster than the United States.

"The odds are always in favor of the hometown team playing on their home court," Szulik said. The EU ruling "sends a message to the consumers of the international marketplace that Microsoft's behaviors and practices will not be tolerated, and competing in a free and open environment is the end goal."

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