As expected, the EU is about to drop the shoe of muilti-million dollar fines on Microsoft, as EU Competition Commissioner Nellie Kroes says that she cannot see any "way around fining U.S. software giant Microsoft for breaching the bloc's antitrust rules."

C|Net News has a handy link to its past coverage of the dispute.

Fundamentally, this is not a legal case. There is not a known standard against which conduct can be weighed. In the U.S., antitrust has become an amorphous collection of buzzwords and b********, run primarily to enrich the system's economist and lawyer mandarins, with an element of strategic manipulation by competitors tossed in. And that's the good news. Things are worse in Europe, where antitrust has become a tool for central planning, one that embodies both Europe's old love of state-aided cartels and its new distaste for competition based on intellectual property and creativity.

So what does Microsoft do, or any other company caught in the sights of dirigiste antitrust? In the early days of the U.S. antitrust case against Microsoft, Bill Gates held a briefing for potentially sympathetic D.C. think tank types. Afterwords, a colleague came back to the office laughing, saying (rough recollection): "He thinks that he is dealing with a beneficent government that is in this case making a mistake, and that once he points out logically where the error lies, it will of course correct itsefl. He discounts the political forces at work. Can you imagine how long this is going to take?"

Microsoft ultimately won the U.S. case because the Court of Appeals recognized that the government's antitrust mandarins were pushing a theory of tying that was fundamentally flawed, and that the government needed to be saved from itself, and because a new Antitrust Division leadership, equally aware of the trap the government was in, gratefully grabbed the lifeline thrown to it by the court. It is not clear that anyone will save the EU government from itself.

Nor is it clear how Microsoft and other companies should react. Clearly, they must keep the focus on the reality that this is a debate over what obligations should be imposed on a platform company, not over whether an existing standard of conduct has been transgressed. The EU, by pretending it is the latter rather than the former, is making by stealth a quite serious industrial policy decision. One is tempted to stand back and watch it self-destruct, but in a globalized world it may be difficult to avoid becoming collateral damage.

posted by James DeLong @ 8:20 AM | Antitrust

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