Microsoft, Bundling and Small Business

"Just about everyone has weighed in on the recent antitrust ruling by the European Union Commission against Microsoft for its practice of bundling products.

That includes the Small Business Survival Council, a U.S.-based small business advocacy group. They have criticized the ruling on the basis that free markets will provide enough protection, stating 'entrepreneurs are hard at work looking to challenge the current dominant market players.'"

- While my friend Anita at Small Business Trends makes a point, in my opinion, she also misses the point. Bundling has nothing to do with Open Source software (Linux, etc.). Bundling has to do with using monopoly power to put small and sometimes large (Netscape) software companies (the competition) out of business. While some companies have benefited from bundling it actually hurts most companies. This is because Microsoft does not support open standards. Open standards would allow third-parties to exchange documents without any difficulties. A good example is Microsoft's support of an XML standard for their Microsoft Office documents. Microsoft says it supports the XML standard but it has changed it enough so that it will not work with other software. This forces customers to stay with Microsoft products.

If Microsoft supported open standards then third party software, including their own Microsoft Project, would be able to easily share documents. Since they do not, you always will have usage problems. If you notice in Small Business Trends post they had to convert documents to the .PDF format. This is a third-party format that many software titles support. Notice that it is third-party.

What does this mean for small business? Well, what it really means is that by bundling Microsoft is essentially forcing you to stay locked into their platform and software. Everyone knows that depending on just one vendor increases your risk of doing business and this is effectively what Microsoft is forcing you to do. In the long run it would be better for small business if bundling was not allowed. This would effectively increase competition, lower prices and make software more stable and easier to use.

In the old days it may have been valid to say that without Microsoft bundling products you would not be able to afford some software products. With the advent of open source software this is no longer the case. It is very easy to install such products as Open Office, Mozilla, GnuCash, etc. You do not need any special skills. Just download the program and run the setup. You can even easily replace your Microsoft OS using Xandros, a Linux distribution so easy to install (or buy pre-installed on a PC or laptop) that in some ways it beats out the Microsoft OS'es.

In conclusion, bundling forces you to use buggy products with to many unneeded features that actually make running your business more difficult and forces you to take on risk without choice. Bundling also does stifle innovation. If you do not believe this then tell me the last time there was an innovation in Internet Explorer. I can tell you when, when Microsoft was competing with Netscape. As soon as Microsoft made Netscape disappear by using it's monopoly power and bundling, the innovations in Internet Explorer stopped. While I can admire Microsoft for it's business success I can not admire it for it's abuse of it's dominant position. In my opinion, this is what the EU is trying to address and what is causing concern throughout the world. -ed.
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