Monthly Archives: November 2007

Competition and consumer protection

Antitrust cases in the U.S. and Europe against Microsoft concerning their operating system product were unfair and unnecessary. Because of the nature of computer operating system software, competition in this industry is a different concept compared to other industries. Consequently, the claims against Microsoft in the U.S. and Europe are meaningless. Instead, the U.S. and Europe should focus on liability legislation in the software industry.

False protection for consumers

While competition law may be effective in curbing abusive behavior in certain industries or markets, the operating system and computer software markets have a special characteristic, hardly found in other markets. A car, a telecommunications service, a steel manufacturer’s products, or a bank’s financial services, are all easily replaceable by a competitor’s products or services, in terms of usability and acceptance by the customer or consumer.

The operation of a Renault car is the same as a Toyota. A consumer could replace one with the other, and continue using the new car without having to re-learn how to use it.

If I am not satisfied with the financial services offered by my bank, I can easily go to another bank to use their services instead, because the principles and the concepts of both bank’s services are the same.

Competition in cars or bank services can be based in terms of service or product quality, or price, or other factors. Like competition, abusive behavior by one of the market players is forced by means of abusive pricing, or undermining their competitor’s abilities to stay in the market.

However, competition and abusive behavior does not depend on the usability of the product or service.

Computer operating system software is different from other products precisely in that the available options in the market can hardly be exchanged by similar products, due to usability reasons. While you can change your Mercedes by a Skoda, and still be able to drive it with your knowledge about a generic “car”, the same cannot be done with operating systems.

One cannot simply replace their Microsoft Windows operating system by a OS/2, Linux, Mac OS X, FreeBSD, or AmigaOS and be able to continue working in the same way. First of all, existing software packages and applications cannot be used on the new operating system. Secondly, the user interface and the way to work with each operating system is different. A user of any one operating system cannot immediately begin using a competitor’s product, like they could do with a car or a bank’s financial product.

For this reason, to speak about “competition” in the operating system market is bogus. From the end user perspective, competition in the operating system is non-existent.

As a consequence, the monopoly accusations against Microsoft in the U.S. and Europe are bogus as well. Microsoft is unfairly being accused of dominant position in the operating system market. If the most used operating system in the world were from a different company, it would be equally unfairly be tried for monopolistic practices.

Consumers gain no benefit from the recent court rulings against Microsoft. To force Microsoft to remove icons from the basic Windows desktop, or to require that a media player is not bundled with M.S. Windows are very pointless outcomes of these rulings; these represent no benefit for consumers.

True protection for consumers

If the European Commission and the U.S. want to protect consumers, it would be far more useful to introduce legislation that assigns software producers accountability for malfunctions and problems resulting from defects in software products.

Software “bugs” are defects in software applications (products). Such bugs have caused consumers far bigger problems than the lack of choice of a DVD player software in their computer systems.

This is applicable to many software producers. For example, the ‘Cache Bypass’ vulnerability in Microsoft Outlook made possible for someone to write and publish the BleBla virus in 2000, causing damage to more than just Outlook users. In 2003, the Blaster and Nachi/Welchia worms made use of Microsoft Windows XP’s defective (vulnerable) Remote Procedure Call (RPC) interface, and again caused many thousands of hours of wasted time for Windows users. Unix products with vulnerabilities have been the cause of similar incidents (even if they haven’t made big news).

There is a basic need for accountability of software companies for the software they sell, much like other product manufacturers can be held liable for defects in their products.