The barely-disguised glee evident yesterday among some members of the European Commission following its anti-trust victory over Microsoft is understandable, but may prove premature.
The European Court of First Instance's decision to uphold the stiff penalties imposed against Microsoft in 2004 for abusing its dominant position in the software market is without doubt a significant victory. It is a very valuable fillip for the commission in its role as the enforcer of competition across the European Union. Brussels has suffered a number of significant reverses in this regard at the hand of theEuropean courts.
The fact that yesterday's victory came at the expense of Microsoft - a veritable standard bearer for globalisation and US-style capitalism - can have only added a certain piquancy for some.
But the fundamental issue of the lack of competition in the European software market remains unresolved and will remain so for some while. It will be months if not years before it becomes clear if yesterday's decision is sufficient to force Microsoft to deviate in any significant way from the practices which have made it the dominant player in the global software business, with 95 per cent of the European market. And even then it will not be apparent for some time if the European consumer will reap any tangible benefit from the changes.
The €497 million ( $690 million) fine upheld yesterday is a large amount of money but it must be seen in the context of Microsoft's annual sales of $50 billion and profits of $14 billion.
Microsoft is unlikely to simply roll over and start doing Europe's bidding any time soon, particularly given the far more relaxed attitude taken to its market dominance by the United States, on whose tacit support it can rely. Investors take a similarly sanguine view, with Microsoft's shares down only slightly on yesterday's news, indicating that the market anticipates no radical changes in the group's business model or practices.
That said, yesterday's decision should allow the commission to approach the issue of Microsoft's dominance with renewed vigour and authority. Microsoft likewise should be more open than herertofore to implementing competition remedies put forward by Europe now that the financial consequences of continued non-co-operation are punitive and unavoidable.
The challenge for the commission is to come up with remedies which are workable within this new paradigm. To date the commission's track record in this regard is mixed. Its most significant intervention - requiring Microsoft to offer a version of its new Vista operating system without some other Microsoft software bundled up - has had a negligible impact on the market.
Yesterday's ruling has strengthened the commision's hand, but continued confrontation with Microsoft is likely to be counter-productive. It behoves both sides to now show pragmatism.