Gallowglass

Linux v. Microsoft in Europe

An interesting conjunction of stories today.

The Seattle Times reports on Microsoft’s new legal travails in Europe. Microsoft has been using a special discount program to try and undermine Linux (Microsoft has also just paid whopping amounts of cash to a company that is threatening to sue Linux users and developers, but that’s another story). Apparently, Microsoft had a program that offers discounts to schools and governments if they looked likely to go with cheaper competitors (read Linux). Under certain circumstances, Microsoft was even prepared to give away its software. This would appear on the face of it to be quite illegal under EU competition law. Microsoft is claiming that they only used the program twice in Europe, both times on small-beer deals. It’s not clear yet whether the European Commission (the relevant authority) will take action against them.

However, in other developing news, the European Parliament and European Commission are about to sign a deal with Microsoft to supply software again to run their internal operations. The interesting bit is that the Parliament and Commission ran tests on Linux for several months, in order to improve their negotiating position with Microsoft.

Now the first and the second needn’t add up to anything much. There isn’t any evidence whatsoever that Microsoft has been offering illegal subsidies to the authority that (generally speaking) is supposed to oversee competition policy in the EU. And I’d be quite surprised if Microsoft had done anything so dumb (although given some of the shenanigans which emerged in the US antitrust trial, I suppose that anything is possible). But what this may well do is to strengthen Microsoft’s bargaining position with the Commission. The Commission’s competition directorate has been getting some flak recently for stepping in to correct markets on dubious theories of market power, and has promised to be more careful in future. If Microsoft can manage to blur the distinction between potentially illegal programs of discounting aimed at undercutting Linux, and the kinds of bargaining that it engages in day-to-day with the Commission and other purchasers of Microsoft software, then the company isn’t in a bad negotiating position at all.