In Europe, Can Microsoft Call Google A Monopoly And Win?

They say it takes one to know one. Who better to point out a monopoly than a monopolist? Microsoft may call Google a dangerous monopoly during its next antitrust defense in Europe.
They say it takes one to know one. Who better to point out a monopoly than a monopolist? Microsoft may call Google a dangerous monopoly during its next antitrust defense in Europe.So claims the New York Times in a thinly sourced story posted over the weekend. Thin as in "a person with direct knowledge of Microsoft's legal defense." Oh yeah? According to the story, by Kevin O'Brien:

Microsoft will argue against a European Commission proposal that it promote competing browsers in its Windows operating system on the ground that such a move would strengthen its rival Google's dominance in the global search-advertising market, according to a person with direct knowledge of Microsoft's legal defense...Microsoft would outline what it saw as the damaging effects to the search-advertising industry of incorporating competing browsers—like Firefox from Mozilla or Chrome from Google—into Windows.

Whoa, what a great defense. It's seriously good. Confession: I'm no lawyer But I've covered Microsoft antitrust cases since 1997, which is long enough to recognize a surprisingly good and novel defense—and it's boldly timed.

Technically speaking, there is no defense for Microsoft. In January, the European Union's Competition Commission sent the company a document called the Statement of Objections. The document concluded a year-long European Commission investigation into Internet Explorer and whether Microsoft had illegally "tied" the browser to Windows. Tying is legal jargon for bundling or integrating. In its 1998 case against Microsoft, the U.S. Justice Department also made a browser tying claim, but dropped that portion of the case in 2001.

Typically, the Statement of Objections, while seemingly preliminary, is final. Microsoft's scheduled court appearance isn't for defending against some proposed adverse ruling. Technically, the European Commission has already decided against Microsoft. The hearing is the company's chance to mitigate the punishment—or in legal parlance, the remedy.

But if O'Brien's reporting is right, Microsoft plans a bold defense. The company will seek to mitigate the remedy and to negate the validity of the finding—that Internet Explorer is tied to Windows in violation of local antitrust laws. Strangely, Microsoft's earlier European antitrust case is precedent for the claims against Internet Explorer. In March 2004, following a five-year investigation, the European Commission found that Microsoft's bundling of Windows Media Player with Windows violated European competition laws. In September 2007, Microsoft lost the appeal of the case, after Europe's Court of First Instance upheld the antitrust claims against Microsoft.

Here's the argument I would make if working for Microsoft:

  • Increased browser competition has dropped Internet Explorer usage share. Last month, StatCounter boldly issued a press release claiming that "Firefox 3.0 becomes most popular Web Browser in Europe for first time."
  • Google search share is over 60 percent throughout most of Europe; it approaches 80 percent in some countries.
  • The most popular non-Microsoft browsers, including Mozilla Firefox and Apple Safari, bundle Google search.
  • Google has begun tying its own services to its Chrome browser.

If presented well, Microsoft could tell the story that Google is a dangerous search and advertising monopoly in the making—and its ambitions depend on tying search and related services to popular Web browsers.

Google will testify, presumably against Microsoft, during the closed-door hearing. It's a risky move for Google, and one Microsoft can use. The argument: Google seeks to use the European Commission to expand its search dominance. The EC constrains Internet Explorer distribution, to the benefit of browsers bundling Google search. In February, I wrote at Microsoft Watch (over which I am no longer editor):

Google is setting itself up for a big fall by gunning for Microsoft this way [actively participating in the case]. The search giant is engaging in competition by litigation with a governmental organization that has no legal or public mandate to reciprocate anything. In fact, Google is likely to be investigated by the European Commission some time in the near future. Google's search share, which is higher in many European countries than in the United States, is reason enough for the EC to open an antitrust investigation. It's not a matter of if but when.

Microsoft's previous court is its legal weapon of destruction. The Court of First Instance ruling on Windows Media tying opened the way for the European Commission to go after other high-tech companies. Google is an obvious target because of its search dominance and release of Chrome and the Android operating system—both with ties to search. Already, several PC manufacturers have announced plans to release netbooks running Android, which ships with Chrome. Microsoft could argue that Google competition against Windows is another reason negating a harsh remedy. Microsoft also could argue that Android netooks are yet another reason for the EU to curb Google's monopoly expansion, now.

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