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Storytelling In The News: #92

Microsoft and the EU do battle with competing stories

March 18, 2004

It is not often recognized the conflict resolution aspect of the legal profession is almost entirely absorbed in competitive storytelling, as each side tries to convince the other, or the judicial authority, of the factual accuracy of its story and its relationship to whatever norms are alleged to be governing the issues in question. Vast sums of money are spent in efforts to tell the winning story, and even vaster sums of money can hang on the outcome of the storytelling competition. Corporate and individual futures may also depend on the result. Microsoft's story vs the European Union's story This morning's top business news around the world concerns the epic struggle as to whether European Union will "sanction" the giant Microsoft Corporation for its alleged anti-trust practices, i.e. formally issue the story that Microsoft has broken the law and require Microsft to pay a substantial fine.

In a last-ditch move to secure EU deal, Microsoft told a new story on Wednesday: it offered to include its rivals' programs on personal computers sold throughout the world, as part of a last-ditch attempt to solve its antitrust fight with the European Commission.

But as of Wednesday night, Mario Monti, competition Commissioner, had yet to accept the offer, despite a second meeting in two days with Steve Ballmer, chief executive of Microsoft. Monti was understood to be considering the issue overnight after a day of talks with Microsoft.

Monti now faces the dilemma of whether to accept Microsoft''s story promising concrete measures offered by Microsoft or formally tell its own story that the company has broken European law, so setting a historic precedent. He could inform the company as early as today Thursday, although the formal decision is scheduled for March 24.

Mr Ballmer is keen to avoid the Commission issuing the formal story that Microsoft has broken the law, since this story could set a precedent for a series of potential cases throughout the EU and perhaps beyond, with more legal problems for Microsoft.

On Monday, the European Union's 15 member states on Monday backed the Commission's case against Microsoft's alleged abuse of its Windows monopoly, making a formal decision against the software giant even more likely. Several big member states, led by Britain and Germany, are said to have called for the Commission to make a formal decision telling their story rather than reach a last-minute deal.

At a news conference today, Thursday, it was apparent that the talks had broken down. Monti said he decided "competition and consumers will be better served with a decision that creates a strong precedent. It is essential to have a precedent that will set clear principles ... for the future conduct of a company with such a strong dominant position in the market," he said.

The European Commission's draft ruling is said to accuse Microsoft of monopolistic abuse related to the way it bundles digital media-player software with Windows and for the limits on how much of Windows computer code it shares with rival makers of software for low-end servers. Monti reportedly wants Microsoft to offer computer makers a version of Windows without its Media Player to give rivals like RealNetworks a better shot at getting onto consumer desktops. He also would demand that Microsoft share with rivals more of the code for Windows to improve so-called interoperability with competing networking software made by Sun Microsystems and others. Monti is insisting insisted a settlement go beyond the draft ruling to include Microsoft's business tactics.

For Monti, the decision to press ahead doesn't assure that its story will ultimately prevail, at least any time soon. Only last week, the European Court of First Instance proposed to hear in May GE's appeal of the commission's 2001 rejection of the acquisition of Honeywell. But a long fight clearly didn't deter Monti, who has the political backing of EU member governments in this case. Recent court decisions have curtailed the commission antitrust rulings, but those mostly dealt with European companies, and specifically pricing matters. Microsoft, like Coca-Cola or McDonald's, , is a particularly American brand and one evocative of U.S. global domination, which could result in a different treatment in the courts.

Bottom line: an epic storytelling contest

A large number of countries and the giant Microsoft Corporation are thus involved in a massive struggle over whether the European Union will formally tell its story that Microsoft has broken the law, or whether Micrsoft's story about its future conduct will cause the European Union to refrain from formally telling its story. If one were to ask the participants in this debate, "What's the value of a mere story?" they would probably say not much. They would probably say that the struggle was about antitrust or about policy or about justice or any number of other abstractions.

Yet here they are, eyeball to eyeball, legal team against legal team, in an epic struggle over which story is going to be told and by whom. Thus although the participants are aware that their struggle has vast financial and political implications, they show no sign of being aware that the activity they are engaged in is competitive storytelling.

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