Microsoft fined by myopic EU

The most expensive line of code ever?

Microsoft has been charged €561m for breaching an EU order requiring the company to offer every new user of a Windows PC a choice about which web browser they use. The Guardian's Charles Arthur reports:

The error arose when Microsoft's own programmers forgot to include a single line of code that would have automatically triggered the "browser choice" program on versions of Windows 7 running its first major update, called Service Pack 1 (SP1).

A source close to Microsoft explained: "It was a single line in the code that triggered the browser choice program. It had a list of versions of Windows to test against: if the version was found in that list, the program would run. They didn't include Service Pack 1, which is effectively a different version of Windows, in that list. And so the program didn't run."

From a rule-of-law point of view, the EU had no option but to charge Microsoft for the breach. It had mandated the company to provide an option; the company had failed to comply with that order.

But the order itself is desperately out of date. It goes back to the fact that Microsoft abused its monopoly over desktop PCs in the late 1990s to ensure Internet Explorer became the dominant web browser, beating the then-leader Netscape Navigator. It was a classic anti-competitive move, and the American Department of Justice accordingly took Microsoft to court, settling in 2001.

But by the time the EU took similar action, in 2009, the computing landscape was completely different. Browsers were no longer just optional extras; they were integral to shipping a PC which worked out of the box at all. The EU could not realistically require the company to ship a version of Windows without any browser, as it had done in 2001 when similar action was brought over the company's bundling of Windows Media Player. And so it required the company to offer users a choice of browser on the first boot-up of Windows 7, instead.

The arbitrary distinction between what does, and doesn't, count as legitimate for Microsoft to bundle in to Windows 7 renders the whole case nonsensical. The company also bundles a calculator, basic text editor, online gaming service and several card games in with the OS, but faces no pressure to strip them out. Meanwhile, Apple, despite having as great a lead in the tablet market (depending on whether e-readers are defined as tablets) as Microsoft does for desktop PCs, faces no legal pressure to offer users a choice as to whether Safari is the default browser for iPads.

There are still ways Microsoft could abuse its monopoly. Requiring any hardware vendor which wants to make PCs and phones to exclusively use Windows on both, for instance, would be pretty clear-cut. But it's getting harder and harder to think of software which it would be unacceptable for Microsoft to bundle with its OSs. As with its misguided war on cookies, the EU is showing its blindness about technological issues.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.