Zeal For Truth

As was mentioned Friday in the Weekly Links, Microsoft has been fined over 1.35 billion dollars by the EU - the largest such fine ever - for several issues of non-compliance with the law. But before we get to some of the details of the story, let’s look at a short historical overview.

Microsoft started out as quite a small player back in the mid 1970’s. But like all (yes all) successful businesses operating on the free market, they offered goods and services that people wanted and were willing to pay for. Microsoft made excellent profits, provided more and more jobs and gave consumers and other businesses new and existing goods and services that were better, cheaper, faster and more reliable then their competitors.

Obviously Microsoft has been pretty big for a while now. They faced trouble in 2000, being called an “abusive monopoly” in 2000 in a court case, but managed to beat back a forced split in an appeal and settlement.

The EU Takes Its Shot
So now we have the European Union regulators fining Microsoft for non-compliance with certain laws. They most likely did indeed break these “laws,” (hard to tell though with arbitrary language such as “reasonable royalties”) however, are these laws and their reasoning just?

The intro to the Bloomberg story declares:

European Union regulators fined Microsoft Corp. a record 899 million euros ($1.35 billion) for failing to comply with a 2004 antitrust order to stop overcharging for using its patents to connect to Windows.

Somehow, Microsoft has managed to “overcharge” for patent use. So then what is the right price? In reality, there is no moral or legal “correct price” - a price is merely a scientific measurement of where supply meets available demand. Microsoft can charge $4.5 million dollars a second for patent use, or it can give them away for two peanuts and some lint - either is morally neutral. This is because Microsoft owns these patents (intellectual property argument aside). Owning property means you can do whatever you want with it - sell it, burn it, hoard it or shoot it into space among other things. The EU’s justification implies that, regardless of the science, that certain people are entitled by political rights, to the fruits of the labor, time, effort and risk that Microsoft has borne over the years.

The story reveals more:

In a statement, the Redmond, Washington-based software maker said it would review the decision, which found Microsoft overcharged for patent licenses that rivals needed to connect products to the Windows operating system.

The justification of course was that the “rivals” of Microsoft “needed” these licenses to use Microsoft products. First of all, everyone has a right to compete with Microsoft to make a better operating system and improve technology. And even if Microsoft has taken full legal advantage of patent law (in which case, don’t fault Microsoft - fault the law) - rivals still have every right to create substitutes. The fact that these substitutes have been unable to compete with Windows shows that Microsoft is overwhelmingly satisfying customer’s needs in this area. It’s not their fault that their rivals can’t do a good enough job.

Moreover, simple “need” is not a valid justification for stealing Microsoft’s property (a forced lower-than-market price is still stealing). Just because I need bread (even if I am going to die from hunger) I have no right to steal a loaf from Safeway, nor to have a right to buy it for less than Safeway is willing to sell it to me. I suspect that the rivals “needs” are the same kind of “needs” that have American’s in a frenzy over gas prices right now - as though it is written in the constitution that “gas shall be less than $1.50.”

Consider this last bit in light of this:

Microsoft had to provide data to rivals to allow servers to connect to the Windows platform. When patent licenses were necessary for that network data, Microsoft was required to charge “reasonable” royalties.

Brent Williams, a New York-based analyst with Benchmark Co. said, “Over time, every competitor is going to look at that and say `is there an opportunity for me to take advantage of the fact that Microsoft can’t do X without further legal problems, and can I exploit that?”

We have to remember that these laws are not about serving some public good, but benefiting greedy special interests who have failed to compete legitimately on the open market. Microsoft’s creators, employees and users have every right to pursue their own happiness. They have no obligation to the public whatsoever - either to provide their service at a lower price or to help their competition use their products.