Tuesday, September 18, 2007

European values – harass, harry and fine successful non-EU companies!

Microsoft is the latest victim of European ‘values’.

by StFerdIII



Silly mantra’s govern the Euro styled welfare state. Out with liberty, individuality, accountability or commercial competition, or indeed any of the nostrums of the long English revolution stretching from the Magna Carta to the Industrial; and in with soft-headed claptrap and the dangerous nostrums of the French and Russian revolutions. Comrades in compassion one could say. Business is not competitive commerce to the Europeans, but an extended form of political opportunism. Microsoft is the latest victim.

European ‘values’ center on the relationship between big government, big unions, and big businesses in thrall to, and protected by the first two. In this world-view, trying to destroy Honeywell, Google, Microsoft, Boeing or any other non-EU firm is high politics – and a vaunted European value. Why compete in Europe if big-mommy government is going to protect you? The European project, for all its success in stopping conflict, has only been marginally effective in trying to release European commercial value. The single market of 1992 never quite made it. Instead you have 25 different markets with regional and continental governments adding to the costs of doing business.

The case against Microsoft, like all previous anti-American, anti-business lawsuits is beyond frivolous, into outrageous. For all the woes and stupidities of the American legal system, there is a fundamental disconnect between European and American society. In the latter, competition is still embraced. In the former, it must be regulated out of existence – for the community’s benefit of course [and those of the legal elite, wink-wink].

In essence the Microsoft decision displays the European ignorance towards innovation and commercial competition that has the Continent mired in high unemployment, and laggardly growth – regardless of what Euro propaganda says. Real unemployment rates rage far above 10% once one discounts the community service programs; stay at home programs; and those with ‘back-pains’ who supposedly cannot work. One would expect Europe to be the most dynamic and competitive of markets –after all was that not the purpose of 1992 and the SEM [single Euro market] program? Fifteen years later and the same big business-big government-big union alliance is firmly and unequivocally still in control of Euro society.

The EU complaint first ruled in 2004 and upheld yesterday was that Microsoft had abused the dominance of its Windows operating system. The Europeans claimed that the terrible Yankee firm had somehow illegally bundled its own product – Media player – with its own operating system. Interesting. According to this Euro-logic, no firm should be able to build add-on products to a successful platform.

The Europeans went even further. Not only was it ‘illegal’ for Microsoft to extend its product line, but worse, it did not share proprietary software code with rivals, to allow them to build and integrate competing products to the Media Player or indeed to any of Microsoft’s products. Interesting. Now in the Euro-world-view, firms should voluntarily give up their competitive advantage and allow rivals to copy at will, any of their innovations. Imagine the fantasy-land that the Euro-regulators must live in – all successful companies must now voluntarily give up profits and innovation and help their competitors produce similar if not better products!

In this Swiftian world, the EU Commission greedily announced that the Americans – ie. Microsoft – must pay a large fine [to finance the yawning EU social spending deficit one would imagine]. A record €497 million fine was imposed on Microsoft – amounting to another tax. This arbitrary theft should give all leading firms – in and outside of technology – pause whilst doing business in Europe. If you are a market leader then you might be the next prey of European predations and its insatiable desire for tax revenues.

It even goes further. If you are a market leader and want to create new product you will need to ask the EU Commission’s approval in advance. This is not how dynamic markets work. This extra cost militates against innovation and product advancement. Instead of focusing on the complexity of product development and roll-out, firms will now have to ingratiate themselves with the legal elite of Brussels and grovel for approval and leniency.

And where does it stop? If the Marxist Euro-crats took a piece out of Microsoft why not: Apple, Google, IBM, EMC, Oracle, or any other firm with some share of market dominance. Google’s browser is becoming a market based monopoly of sorts; Apple’s Ipod and Iphone destroy’s anything the vacationing Europeans can come out with; and IBM, Oracle and others dominate certain market segments with their products. Will the EU ‘level’ the playing field and ensure ‘fairness’ by suing these firms as well?

My old university Dean who is now EU competition Czar, Nellie Kroes, recently stated that there was nothing to worry about, and that any follow-on to target other successful firms, were just, ‘scare stories about the supposed negative consequences of this ruling for other companies.’ She also did say that any firm which is suffering from competition would be free to come for a ‘coffee and a chat’, however. The implications from the highest EU level are pretty clear – competition is to be regulated, i.e. reduced to political control.

The costs of this regulation and oversight are enormous. Companies targeted by competition lawsuits bear a very heavy burden of legal defence. Time, energy, and management skill are taken away from competing, to fighting the almost unwinnable battle of defeating the government, with its thousands of rabid, brain-washed lawyers eagerly at hand, in court. This of course not only destroys product innovation, it will raise the total costs of products and services in that market for all of society. Firms will build in the legal defence fund through higher costs; lower wages; or in some cases by not innovating at all and playing it safe.

This then is the essence of the Euro-technocratic model. Go after successful foreign firms. Wrap up coercive taxation with pretty words and long winded rhetoric [love, innovation, social responsibility etc]. Then invite others over for ‘coffee’ to chat about how their foreign competition are illegally defeating them in the marketplace. Nothing sinister in this of course.

It is in reality anything but benign. The EU is following a path, different but largely similar to many failed enterprises in human history. EU coercive modern government, replicating the European feudal model, demands that citizens give over 50% of their income, when all taxes and regulatory costs, along with sundry ‘fees’ are counted. This is your [insert national or European] ‘value system’.

So it goes with predatory mercantilism. Only a fool believes that we live in a world of free trade. Globalisation for all its benefits and dynamism is still a very weak process. It is also a defenceless process against the predatory and political ambition of the Euro-elite. Nothing much changes in old Europe – except the legal elite gets stronger, and the market gets weaker.