[Congressional Record (Bound Edition), Volume 150 (2004), Part 4]
[Senate]
[Pages 5013-5014]
[From the U.S. Government Publishing Office, www.gpo.gov]




              EUROPEAN UNION TRADE DECISION RE: MICROSOFT

  Mr. FRIST. Mr. President, for some time now, the U.S. Congress has 
expressed its frustration over the European Union's intransigence on 
international trade issues that are vitally important to the U.S. 
economy. From overreaching attempts to regulate e-commerce, to trade 
barriers against American beef and other agricultural products, the EU 
has relentlessly pursued protectionist policies that disproportionately 
harm American businesses and workers. I now fear that the United States 
and EU are heading toward a new trade war--and that the Commission's 
ruling against Microsoft is the first shot.
  For the most part, economic growth across the European Union has been 
meager during this decade. No doubt this is a by-product of the global 
economic slow down that began in the last year of the Clinton 
Presidency. But as the U.S. economy achieves record-setting levels of 
economic growth, Europe remains stagnant. Why? Because European 
economies are buried by public sector debt; European economies are 
drained of their vitality by excessive taxation; and European economies 
are strangled by excessive regulation from bureaucrats sitting in 
Brussels. Now, as if destroying Europe's economy were not enough, the 
European Commission has taken aim at Microsoft, a company whose 
products and technology have been engines of global economic growth.
  The Commission's ruling imposes the largest fine ever levied by the 
Commission against a company--over $610 million. This fine was imposed 
despite the Commission's tacit admission that European law in this area 
is unclear, and even though Microsoft is already subject to legal 
obligations, under the U.S. settlement, for essentially the same 
conduct that was at issue in the EU proceedings. As a result, money 
that rightfully belongs to Microsoft shareholders will instead be 
filling the coffers administered by Commission bureaucrats.
  The Commission's ruling also requires Microsoft to sell a version of 
Windows without multimedia functionality--i.e., one that cannot play 
audio or video. Thus, the ruling forces Microsoft to spend its energies 
not on developing new, innovative products, but on designing a degraded 
version of Windows--in short, a product that no one wants or needs. 
This preposterous demand, by a foreign government, will hurt one of 
America's most successful companies and harm the hundreds of American 
IT companies that rely on the multimedia functionality in Windows to 
offer their own innovative products and services--companies that are 
responsible for thousands of high-paying American jobs. As the New York 
Times noted in an editorial last Saturday (March 20), the Commission's 
demands ``would threaten Microsoft's business model and, more 
important, harm consumers. The very definition of a computer operating 
system would essentially be frozen where it is today.''
  In imposing this anti-consumer, anti-innovation penalty, the 
Commission has blatantly undercut the settlement that was so carefully 
and painstakingly crafted with Microsoft by the U.S. Department of 
Justice and several State antitrust authorities. There can be no 
question that the U.S. Government was entitled to take the lead in this 
matter--Microsoft is a U.S. company, many if not all of the complaining 
companies in the EU case are American, and all of the relevant design 
decisions took place here. Had the

[[Page 5014]]

Commission been cognizant of America's legitimate interests in this 
matter, it would have acted in a manner that complemented the U.S. 
settlement. Needless to say, the Commission instead selected a path 
that places its resolution of this case in direct conflict with ours--
and threatens the vitality of America's IT industry in the process.
  The Commission's complete indifference to the negative impact of its 
ruling on American jobs, American consumers, and the U.S. economy--and 
its total disregard of the Department of Justice--are intolerable.
  The European Commission has, of course, on many occasions paid lip 
service to the importance of international coordination in the area of 
competition, and on the need for other countries to be sensitive to 
extraterritorial effects of their antitrust rulings. But actions speak 
louder than words, and with the Microsoft ruling the Commission appears 
intent on saying that it considers the Department of Justice, the U.S. 
courts, and principles of open and fair international trade largely 
irrelevant.
  It is critical that the Departments of State and Justice stand up not 
only for an important American company, but also for U.S. industry, 
U.S. shareholders, and American workers. If the U.S. Government does 
not make a clear and strong statement objecting to the EU actions, we 
will lose influence and credibility for years to come to the detriment 
of the U.S. economy and U.S. consumers.

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