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Down To Business: Europe Tough On U.S. Tech Powers

Brussels is getting hip to the American way: Slow down the richest, most successful companies with legal and regulatory force
Our worst commercial fears are being realized, as offshore rivals gain quickly on one of this country's most lucrative industries. Yes, the United States, bastion of the junk lawsuit and multimillion-dollar punitive damage/fine, is in danger of being outlawyered by the Europeans.

The European Commission last week was reportedly deciding whether to bring formal charges against Intel for alleged anti-competitive practices against Advanced Micro Devices. AMD--which is due to have its many days in U.S. court with Intel in 2009 (although a federal judge has dismissed a major portion of that suit)--has been shopping its case to Asia and South America as well, claiming that Intel maintains its dominant share of the PC microprocessor market through threats and unfair rebates.

Security vendor McAfee appears to be taking its own anti-competition case to Europe's trustbusters. In a full-page ad in the Oct. 2 issue of the London-based Financial Times (as opposed to the New York-based Wall Street Journal), McAfee argues that Microsoft is leveraging its operating system monopoly to shut out rival security vendors.

Specifically, McAfee maintains that the 64-bit version of Microsoft's forthcoming Vista poses "unnecessary risks to the consumer" because it prevents third-party security vendors from accessing the operating system's kernel (see story, "Security Vendors Escalate Windows Vista Shoving Match"). The Microsoft technology in question, called PatchGuard, is meant to stop malicious code such as rootkits from wreaking havoc at the kernel level.

McAfee is having none of it. "Microsoft seems to envision a world in which one giant company not only controls the systems that drive most computers around the world but also the security that protects those computers from viruses and other online threats," McAfee grumbles in its Financial Times ad. "Only one approach protecting us all: when it fails, it fails for 97% of the world's desktops."

McAfee's posturing--and it may very well have a legitimate beef--follows a similar protest by Symantec, though both vendors haven't formally pressed the Vista security issue with the European Union's Competition Commission.

Perhaps that's because the commission bureaucrats, having already piled close to $1 billion in fines onto Microsoft for alleged anti-competitive behavior and noncompliance with EU dictums, and having already directed Microsoft to alter its Windows development plans, are now reportedly gauging whether Vista's encryption and handwriting recognition capabilities also are unfair. Taking out ads in Europe is a decidedly more nuanced approach than going directly to the competition authorities.

At one point, as reports, Microsoft said it would delay Vista's release in Europe if the commission didn't give the go-ahead to its security architecture. The commission has put the onus on Microsoft to figure out whether the vendor's plans conform to its 2004 antitrust ruling. The decision is now in the hands of Microsoft's chief tea leaf reader.

Sun Microsystems, Novell, and other serial IT industry litigants have taken their legal gripes to Europe for years, mostly against Microsoft. They usually get a receptive hearing, since the homers in Brussels tend to view Microsoft's business practices as the commercial equivalent of U.S. manifest destiny. Despite its defiant public stance, Microsoft is so worried about Europe's heavy hand that, as a condition of its $1.6 billion settlement with Sun and $536 million settlement with Novell, each company had to agree to back off in Europe.

Europe, of course, isn't the only economic bloc that considers its legal and regulatory systems an extension of its industrial policy. Japan has tied up foreign competitors in red tape for decades. A foreign tech company can't wipe its nose in China without first paying tribute to the government power brokers. Brazil and South Korea are similarly protectionist.

As long as vendors go legal-venue shopping, they'll find a sympathetic ear, often for the wrong reasons.

Rob Preston,
VP/Editor In Chief
[email protected]

To find out more about Rob Preston, please visit his page.

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