CNBC Business | Hannan's View: Soft target

Hannan's View: Soft target

The EU faces off against Microsoft

The EU’s treatment of the world’s top computer firm should be seen as a wake-up call

How long before Microsoft simply stops launching new products in the EU? It is hard to see how any business model can work alongside the constant possibility of more or less arbitrary and unlimited fines.

The European Court has upheld the Commission’s levy of an unprecedented €497m on the computer firm. Microsoft’s crime? To “bundle” its Windows Media Player software with its PC operating system. In other words, to give its customers what they wanted. Don’t take my word for it. While the EU judgement was pending, Microsoft, as a conciliatory gesture, offered an “unbundled” version of its product alongside the standard one. 1,787 people bought it, as against the 35.5 million who bought the “bundled” version.

The Brussels authorities claim to have been acting on behalf of consumers, but it is hard to see how any consumers have benefited. Not only are they being denied a package they plainly liked, they are now also at serious risk of not being able to benefit from further innovations by the world’s leading software firm. Several individual companies in my constituency – and one or two entire chambers of commerce – have written to me expressing alarm at the implications, including the possibility that their access to Vista might be prejudiced.

The day may not be far off when Microsoft simply gives up on the EU and concentrates on markets where it is less likely to suffer legal expropriation.

True, this hasn’t happened yet. On the contrary, Microsoft is doing the opposite, sucking up to the Commission, sponsoring its functions, hoping to win by backroom lobbying what it should have won by force of logic. The reason it is doing so, I suspect, is that it is being advised by Brussels-based lawyers and, even more so, Brussels-based lobbyists.

The interests of lobbyists often diverge from those of their paymasters: crudely, lobbyists prefer a prolonged battle to a quick victory. But the euro will eventually drop – no company can operate in a climate that offers no security to investors.

Lobbyists are, as this column has argued before, an almighty waste of money. They are held in contempt by most decision makers, precisely because they have no background in the issues on which they claim to be speaking.

Businesspeople will one day cotton on to the fact that the best lobbyists they can get are their elected representatives, who have a genuine expertise in the legislative process and who will fight with unforced conviction for the interests of their constituencies. And shall I tell you the best bit? We’ll do it for free. EB

Daniel Hannan is the Conservative MEP for South-East England