Stupid is as stupid does

I haven't posted for a while because frankly, there wasn't much of interest to post about. But now we have the mother of all issues - the EU court case - set to take its next step. According to reports, tomorrow MSFT can expect to be fined as much as $2.5M/day backdated to December of 2005 for failure to comply with the EU Commission's demands. That would also give MSFT the dubious distinction of being the first company to ever be fined by the EU Commission for failure to comply. Additionally, it looks like the EUC may ratchet up the fines to $3M/day moving forward if MSFT continues to disobey.

For the record, I think the EU Commission's original charges were even weaker than the DOJ's, and I hope that the European Court of First Instance restores what little faith I still have in European justice (not to mention common sense) by finding against the EUC when they ultimately hand down their verdict on MSFT's appeal. That said, we have the current mess to deal with and one of the best summaries of that imo, is this one by David Hunter at HunterStrat:

• The EU and Microsoft: a pox on both their houses

I particularly like this line, talking about the European Union’s Competition Commissioner Neelie Kroes :

...she runs an interminable process that makes a sieve look tight with her as the head blabbermouth.

That's a fact: the EUC has been a sieve of leaks from day one, which should be totally unacceptable. Like me though, Hunter is left scratching his head as to why compliance by MSFT has been so problematic. The EUC and most MSFT detractors seem to back the theory that "MSFT management tried to play chicken with us and failed". That's certainly possible and if so, I think MSFT's board of directors have no choice but to ask for Ballmer's resignation - seriously. MSFT on the other hand, is going with the "we tried our best to comply, but the EUC kept changing the ground rules" defense. This argument would have had a lot more credibility if MSFT had made it two years ago versus just over the past 6 months. However, the EUC's apparent expansion of scope while simultaneously refusing to document said, does raise some concerns which, along with their leaks, mean that I can't discount this scenario entirely. Finally, there's the possibility that MSFT decided early on that providing the requested documentation in full was not in the company's best interests, and has been stalling all along hoping to close the gap to where the appeal could be heard.

If I had to guess, I'd say there are elements of truth in both scenario #1 and #2, but that #3 seems to explain what we've seen best. If so, it's a very dangerous strategy. First of all, MSFT is not guaranteed to win the appeal, whereas their shoe-dragging to date is guaranteed to have pissed off the EUC and made them less amenable moving forward - not exactly what you want if the Court of First Instance ends up backing the EUC 100%. Second, I wonder whether the cost/benefit analysis that might have gone into such a decision, included the further damage to MSFT's credibility amongst Governments, customers and investors as this extended saga has played out in the press worldwide? In any event, I guess we'll know more tomorrow. Meanwhile, MSFT is doing their usual clumsy job of trying to deflect attention from this impending bad news:

• Microsoft sees January Vista release
• Ballmer: Future Windows to Arrive Faster

And of course the stock is taking another major hit...