The recent decision by the European Court of First Instance to uphold the fine and sanctions the European Commission imposed upon Microsoft in 2004 appears to have justified the Commission’s interventionist approach to competition policy. A five-year investigation of Intel may also end with severe penalties. But the EU should not rejoice at this seeming triumph over American “big business.” Instead, it should ponder if its policies actually make Europe hospitable for innovating enterprises.
Italy’s Minister for Trade and Europe, Emma Bonino, commenting upon the Microsoft ruling, observed that the very name Microsoft evokes “what the US is capable of doing.” To Bonino, if a company of comparable significance isn’t being born in Europe, it is because “we haven’t been able to set up a favorable climate for it to flourish.”
The European Commission’s approach to competition policy won’t move Europe toward that better climate. Indeed, high-tech companies like Microsoft and Intel are particularly unsuitable targets for antitrust policing, because regulators cannot possibly move at the speed of ‘Internet time.’
Consider computer operating systems, business accounting software, databases, Internet search engines, silicone chips, broadband services, cable, and cellular telephony. All are examples of fast-moving industries in which competition is fierce and great wealth is created. Industries and firms, like people, have their own life cycles, and the pace of change in high-tech industries is unprecedented.