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More multimedia competition?

This column originally ran in ComputorEdge on April 23, 2004
(Issue 2217, An Apple a Day)

If you've somehow missed the news, the European Union smacked Microsoft upside the head in late March.


Not only did the EU fine Microsoft $600 million, but it is forcing Microsoft to change how it sells Windows in Europe.

All of which should, oddly enough, end up being good news for consumers here in the United States as well.

Streaming media is issue

The fine and the constraints on Microsoft's business practices are both in reaction to Microsoft's attempt to leverage its near-monopoly on operating systems into similar dominance in the streaming media field.

While early standards such as RealMedia and Apple's Quicktime, and even the public-domain MP3, all at one time enjoyed far greater market acceptance than Microsoft's Media Windows Player, the technologically inferior Windows Media has been more and more prominent online of late.

And as the EU found, that's because every copy of Windows ships with Windows Media Player already installed and configured.

If you want to listen to Quicktime audio on your Windows machine, you have to go to the Apple Web site and download a copy of the Quicktime client. If you want to listen to RealMedia files, you have to go to the Real Web site and download their player. Both Apple and Real offer free versions of their media players (more on that below), but there's still a certain barrier to having to download those players while the Microsoft media player is already installed.

The EU determined that this is another instance in which Microsoft is illegally using its dominance in the operating system market to unfairly benefit other areas of its business.

U.S. courts made a similar finding in the area of Internet browsers – that Microsoft had illegally included Internet Explorer in Windows, and cost consumers a real choice in browsers when Netscape was unable to compete.

Unfortunately, the American court didn't back up that finding with any meaningful remedy for consumers – and by the time that case was settled, Netscape had already been acquired by AOL.

Sharp teeth

The EU court's decision, however, has some tough remedies. In addition to the record fine (which won't, in truth, hurt Microsoft very much), the order to begin selling a copy of Windows without the Windows Media Player in Europe is likely to give Real and Apple a leg up. This new version of Windows will have to be clearly marked, and may have to even cost less in order to compensate for the value of the missing media player.

For those consumers in Europe who choose the less-expensive version of Windows, listening to any online media will require a download and installation process. Microsoft's Windows Media format will no longer have a built-in advantage over Real or Quicktime – or any other proprietary format that may come along.

Of course, it would have been preferable if the EU had ordered Microsoft to remove the WMP from every copy of Windows, but this is still a much more substantive decision than the U.S. browser decision.

The streaming media business

So if Microsoft, Real and Apple all give their media players away, how do they make money?

By selling streaming media servers. (And, of late, by also selling upgraded media players with more features, and/or selling legal music downloads in conjunction with the record companies.)

If I want to offer streaming audio on my Web site, I need the software to feed that audio – to handle requests from visitors' media players, to make the connection, and to then hand the players the actual files.

In order to convince Web site operators to fork over money for a Real media server, Real need to be able to point to a large-enough installed user base to make it worthwhile. (Apple is apparently giving away QuickTime servers as a loss-leader marketing tool in order to build up the Apple brand name.)

This is why the EU found that Microsoft's policy of bundling their proprietary media player was an illegal form of competitive edge – it wasn't that Microsoft was just trying to give away its media player, it's that Microsoft is also in the increasingly lucrative business of selling streaming media servers.

Further repercussions

Already, the computer press is pointing to this decision as likely to impact the next version of Windows, in which Microsoft was reportedly going to embed its new MSN search engine – in direct competition to Google, Yahoo, AskJeeves, AltaVista and other search engines.

If you can conduct an Internet search from within Windows, how many of us will any longer go to Google or Yahoo? And if they can't attract enough visitors to continue selling ads to stay in business, how long will it be until the Microsoft search engine is our only choice?

A search engine monopoly might seem a small price to pay for convenience at first glance, but think about it a little more. Do you really want the world's most powerful corporation deciding what results you get when you do a search? What if you're searching for "travel agents" – will you see any agents that don't work with Expedia, the subsidiary travel agency owned by Microsoft? Will you get any hits for Encyclopedia Britannica, or only for Encarta – the Microsoft-owned encyclopedia?

We've already witnessed what kind of controlling behavior Microsoft is willing to engage in when unchecked. The late beta versions of Windows XP contained a primitive Internet search capability (and XP still has this with its built-in file search program – you can search the 'Net as well as your system from the Windows Explorer file manager), which was found to steer people to Microsoft-aligned sites.

After a lot of public protest and thinly veiled threats of government investigation, Microsoft tweaked the search criteria to remove some of the blatant conflict of interest – but who any longer believes in Microsoft's ability to behave appropriately and legally without the threat of massive legal retaliation?