Canada's laissez-faire stance on Microsoft stifles innovation

From: Russell McOrmond <russell _-at-_ flora.ca>
To: Universal Access <cpi-ua (at) vcn.bc.ca>, No DMCA in Canada <canada-dmca-opponents (at) flora.org>
Date: Thu, 8 Nov 2001 12:42:10 -0500 (EST)

  I wish that Canadian Industry Minister Brian Tobin would take the advise
of the OECD and rather than wasting the money on broadband, properly
allocate resources to the Competition Bureau.

  Most of the ministers initiatives suggest to me backward-looking
status-quo forms of corporate welfare handouts to the already successful
old-economy players rather than a look forward promoting highly
competitive and innovative future high-tech directions.


For the OECD story, see "OECD blasts Competition Bureau"
By HEATHER SCOFFIELD
Saturday, October 20, 2001 - Print
Edition, Page B1
http://www.globeandmail.com/servlet/GIS.Servlets.HTMLTemplate?tf=tgam/search/tgam/SearchFullStory.html&cf=tgam/search/tgam/SearchFullStory.cfg&configFileLoc=tgam/config&encoded_keywords=OECD+blasts+Competition+Bureau




  We also have to wonder about the connection between the current round of
copyright reforms and how this will affect future innovation. I wrote in
my submission to the consultation process how excessive interpretations of
copyright policy such as those of the United States can greatly conflict
with competition policy, and considerably harm the most innovative and
competative technology business models such as those derived from the Open
Source and Free Software industries.
  http://www.flora.ca/copyright-2001.shtml








Canada's laissez-faire stance on Microsoft stifles innovation
By MICHAEL GEIST
The Globe And Mail,B30 (Report on Business: Technology)
Thursday 08 November 2001

http://news.globetechnology.com/servlet/GAMArticleHTMLTemplate?tf=globetechnology/TGAM/NewsFullStory.html&cf=globetechnology/tech-config-neutral&slug=TW8GEIS&date=20011108


Despite extensive media coverage of the Microsoft antitrust affair over
the past few years, one perspective has remained surprisingly absent from
the analysis: Seemingly content to ride on the coattails of their
U.S. counterparts, Canadian competition officials have never established
an official public position. 

The failure to act has left consumers and competitors vulnerable to the
consequences of anticompetitive behaviour and has called into question the
federal government's innovation strategy. 

With news last week that the U.S. Department of Justice and Microsoft have
negotiated a settlement, the risk inherent in Canada's failure to take a
stand has become clear. When a change in U.S. priorities yielded a weak
settlement universally regarded as a win for Microsoft, Canadians were
left with scant protection against future abuses. 

The passive Canadian position was always difficult to understand. While
the DOJ, nearly 20 state attorneys-general, and European Union antitrust
authorities actively investigated and launched actions against Microsoft
for abusing its dominant position in the personal computer operating
system marketplace, Canadian competition authorities remained silent. 

That silence is particularly disappointing considering Microsoft's impact
on the Canadian market. Millions of Canadians have purchased computers
featuring Microsoft products, while Canadian software companies such as
Corel have aggressively challenged Microsoft by offering alternatives to
its popular suite of programs. Given the U.S. courts' findings, as well as
the close integration between the Canadian and U.S. economies, there can
be little doubt that Canadian businesses and consumers have been affected
alongside our neighbours to the south. 

More troubling still is that Canadian inaction regarding Microsoft is
hardly an isolated event. U.S. and EU authorities have launched antitrust
investigations into a number of Internet-based businesses in recent
months, yet Canadian authorities have sat quietly on the sidelines. For
example, both U.S. and EU officials have launched antitrust investigations
into on-line travel services, fearful that initiatives such as Orbitz, an
on-line travel service jointly owned by several leading U.S. airlines,
could result in unfair competition in this burgeoning marketplace. 

U.S. officials have also aggressively targeted instant messaging
services. Using their leverage over AOL Time Warner during the merger
approval process earlier this year, they extracted concessions from the
company that will increase the likelihood of openness and interoperability
in future generations of instant messaging services. 

Most recently, U.S. and EU officials decided to take on the on-line music
market. Concerned that the major music labels were attempting to carve up
the post-Napster on-line music market for themselves, authorities quickly
launched an investigation that was recently expanded to include analysis
of contractual dealings between the labels and alternative on-line music
services. The alternative services claim that the labels are unwilling to
license their music libraries at competitive prices, seeking instead to
stifle any new competition by ensuring that the future of on-line music
will only include a few label-controlled services. 

Ironically, Canadian Industry Minister Brian Tobin, the minister
responsible for the embarrassing failure to protect Canadian interests and
markets, has said he would make ``innovation'' a top priority. Although
Mr. Tobin seems to conceive of innovation primarily in terms of
government-supported universal broadband access programs and increased
research support to Canadian universities and colleges, assurances of a
competitive marketplace where innovation can flourish is no less
important. 

Microsoft's past actions were a direct challenge to innovation. The
software giant sought to stifle the innovative activities of its nimbler
rivals through a series of anticompetitive strategies that centred on the
company's control of PC operating systems. The recent settlement, which
does little to allay continuing concerns about features embedded in the
new Microsoft XP OS and tied to the company's .Net initiative, suggests
that this may continue. 

While Ottawa's willingness to invest in innovation may have a long-term
payoff, its policy approach on key legal issues has got it backward. On
matters such as copyright policy, where the government should adopt a
conservative, go-slow approach that recognizes the unsettled nature of
copyright protection measures, it shows signs of charging toward tough new
laws that may alter the copyright balance and curtail innovation. On
matters such as technology competition policy, where it should adopt an
aggressive approach that protects the competitive environment of the
marketplace, it remains mute. 

In a global e-commerce marketplace, the impact of the Microsoft case,
on-line music, and other emerging e-businesses is obviously not confined
to the United States and Europe. Canadians are also directly affected, and
thus deserve a more proactive approach from their competition
authorities. Michael Geist is a law professor at the University of Ottawa
Law School and director of e-commerce law at the law firm Goodmans
LLP. His Web site is http://www.lawbytes.com . mgeist@uottawa.ca 



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