Vogel Internet, Information Technology and e-Discovery Blog : Texas Internet, Information Technology, eCommerce & E-Discovery Lawyer & Attorney Peter S. Vogel : Gardere Wynne Sewell Law Firm : Dallas TX

Apparently the US Justice Department is investigating anticompetitive behavior concerning among others Google, Yahoo! , and Apple since many Internet companies restrict recruiting and hiring of one another’s employees. Since anticompetitive employment agreements in the technology industry are the norm it’s particularly interesting that the Justice Department is pursuing these companies. Internet and IT companies rely of these non-competition provisions to protect trade secrets and Intellectual Property so it will be interesting to see how this develops.

EU Unhappy with Microsoft for Not Distributing a Browser

Following the antitrust dispute in the EU regarding Microsoft’s alleged monopolization of the browser market, Microsoft recently announced that when it distributes Windows 7 there not be any browser. The EU regulators are unhappy with this solution, even though on the surface it does seem that the complaining browser companies (Google, Mozilla, and Opera) should be pleased since they claimed that Microsoft’s embedded Internet Explorer violates antitrust laws.

Are Antitrust Laws Out of Touch with the Internet?

Since antitrust laws evolved from the need to try control monopolies in the 1800’s how much sense does it make to still use these concepts in the Internet world of 2009? Microsoft’s deployment of its operations systems took over the PC market was great for the users since before Microsoft there was no operating system standard on PCs. My Internet Third Big Bang was the 1981 advent of the PC, not just because IBM and Microsoft got into the market, but as result of the PC Clones using Microsoft operating systems a de facto standard developed on Microsof. As a result users could depend on continuity and consistency between software and applications. So maybe the US and EU should re-evaluate antitrust laws for the Internet and IT world that we live with today and in the future.

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Recent reports from the EU potentially impact a number of Internet and IT industry issues of great import, including plans for new laws to protect consumers from IT security breaches, Microsoft’s strategy to defend antitrust claims regarding the Internet Explorer (IE) browser, and a ruling that Intel violates antitrust laws.

EU Notice for Loss of Data

The EU plans to pursue new laws that would create more stringent reporting of IT security breaches, more like the US and Japan. Of course IT breaches are not a new topic in the IT community nor on this blog. However the new California law in 2003 requiring notice to consumers was a model that many states of have adopted, and citizens are clearly better off that they are notified of possible loss of their personal information.

Microsoft Browser Strategy

Recent blogs that Google, joined Mozilla and Opera complaining about Microsoft’s anticompetitive distribution of the IE browser is taking an interesting turn. Apparently Microsoft plans to argue in defense that restrictions on distribution of its IE will strengthen Google’s search-advertising market in an anticompetitive way. Apparently the EU estimates that 85% of the browsers in the EU are Microsoft’s IE, but if Microsoft has its way IE will continue to be distributed with Windows Operating Systems as it has since 1995.

Intel to Get an Adverse Ruling

The EU is expected to rule this week that Intel’s marketing in the EU violates antitrust laws, and Intel’s 81.9% market share is not because it has superior products. Rather the EU will rule that Intel has illegally handed out rebates and paid computer makers to delay products with rival chips.

EU Impact on IT

It’s probably about time that the EU enacted IT security breach laws to protect consumers like many US states. The EU is taking IT very seriously, and not reacting well to US IT companies’ market strategies that may be acceptable in the US. As more countries provide high speed Internet access to all citizens, countries around world will need to be even more vigilant to protect their citizens, by informing them of IT security breaches to protect personal identity and from anticompetitive behavior.

Since I see the Internet as the greatest social change in the history of humans (since there are no boundaries of time and geography), it seems reasonable that governments will only have a higher responsibility to protect citizens since we are all more and more reliant on the Internet and IT.
 

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Google (Chrome browser) and Mozilla (Firefox browser) joined forces in the EU to complain about Microsoft’s marketing of Internet Explorer (IE) originally brought by Norwegian browser company Opera, and T3 filed an antitrust complaint in the EU against IBM for adversely impacting the mainframe market. Neither Microsoft nor IBM are strangers to antitrust actions in the US and EU, and these complaints are just chapters in very long novels. Both companies have had profound impacts on IT and the Internet, and Microsoft and IBM have an interesting history together which makes these EU complaints all the more interesting.

US v. IBM

From its origins with the 1890 Census Dr. Herman Holerith’s 80 column punch card (what I call the 1st Big Bang of the Internet) led to a company called IBM which had a monopoly on punch cards until its consent decree in the 1930s. Then in January 1969 the US Justice Department brought an antitrust action against IBM for monopolizing the computer market. At the time IBM sold its hardware, software, training, and all services as a bundled product. That is, if someone wanted the mainframe software they also had to purchase hardware, training, and everything else from IBM. So in the July 1969 IBM signed another consent decree to unbundle which led to the development of hundreds of companies for supplying software (like University Computing and Computer Associates), hardware (disk drives, memory, and the like). The antitrust trial was heard by a judge in New York for many years before the claims were dismissed when President Reagan came to office in 1981. Interestingly enough one of the lawyers who represented IBM in the trial was David Boies who represented the US government in the antitrust trial against Microsoft in 1998.

IBM and Microsoft Changed Computing Together

In 1981, the same year that the Antitrust suit was dropped by the US government, IBM launched its Personal Computer (PC) as most folks know (my 3rd Big Bang of the Internet). The IBM PC’s operating systems (OS) was a product call IBM-DOS (Disk OS) from an upstart company in Redmond, Washington called Microsoft (MS). When IBM introduced the PC this was a major departure for IBM in that this was IBM’s first product which used components made by others including the OS. There were a number of other PC’s on the market before 1981, many of which relied on an OS from Digital Research called CP/M (Control Program for Microcomputers) which was very popular. Apparently IBM could not reach an agreement with Digital Research, but did reach an accord with Microsoft. Although IBM wanted to restrict the use of IBM-DOS like Apple had done with it OS, but ultimately the Microsoft OS version (MS-DOS) was widely used on the clones (Compaq, HP, and many others) with the advent of the Phoenix Technologies BIOS (Basic Input Output System) that permitted all Intel based PCs to use MS-DOS.

Impact of IBM and Microsoft

Both companies have had a dramatic impact on IT and the Internet as is quite obvious, and these claims in the EU may chart the future of each company. Holerith’s 80 column punch and its progeny which started around 1890 last until the advent of the Graphic User Interface (GUI) which was popularized by Apple’s Lisa (from a license with Xerox) and Microsoft’s Windows products. Ironically one of the most significant events for the evolution of the Internet (my 4th Big Bang of the Internet) was in about 1995 when Microsoft started distributing IE which without additional charge. Microsoft’s IE became ubiquitous and the notwithstanding Microsoft’s anticompetitive business practices, the use of the Internet exploded. So we all should watch closely to see how the EU deals with the claims against IBM and Microsoft as the EU’s rulings will likely impact the future of IT and the Internet.
 

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