September 19, 2020

Adobe Scares Microsoft with Antitrust Threat?

Microsoft has changed the next versions of Windows and Office after antitrust lawsuit threats from Adobe, according to Ina Fried’s article at news.com. Here’s a summary of Microsoft’s changes:

[Microsoft] is making two main changes. With Vista [the next version of Windows], it plans to give computer makers the option of dropping some support for XPS, Microsoft’s fixed-format document type that some have characterized as a PDF-killer. Under the changes, Microsoft will still use XPS under the hood to help the operating system print files. But computer makers won’t have to include the software that allows users to view XPS files or to save documents as XPS files.

[…]

On the Office side, Microsoft plans to take out of Office 2007 a feature that allows documents to be saved in either XPS or PDF formats. However, consumers will be able to go to Microsoft’s Web site and download a patch that will add those capabilities back in.

The obvious comparison here is to the Microsoft’s tactics in the browser market, which were the basis of the big antitrust suit brought by the U.S. Department of Justice in 1998. (I worked closely with the DOJ on that case. I testified twice as DOJ’s main technical expert witness, and I provided other advice to the DOJ before, during, and after the trial. I’m still bound by a confidentiality agreement, so I’ll stick to public information here.)

Critics of the DOJ case often misstate DOJ’s arguments. DOJ did not object to Microsoft making its Internet Explorer (IE) browser available to customers who wanted it. With respect to the bundling of IE, DOJ objected to (a) contracts forbidding PC makers and end users from removing IE, (b) technical measures (not justifiable for engineering reasons) to block end users from removing IE, and (c) technical measures (not justifiable) designed to frustrate users of alternative browsers. DOJ argued that Microsoft took these steps to maintain its monopoly power in the market for PC operating systems. The courts largely accepted these arguments.

Microsoft has reportedly made two changes at Adobe’s behest. The first change, allowing PC makers to remove Vista’s XPS printing feature, may be consistent with the DOJ/IE analogy. By hardwiring IE into Windows, Microsoft raised the cost to PC makers of offering an alternative browser. Depending on how the XPS feature was provided, this may have been the case with XPS printing too. There is at least a plausible argument that allowing PC makers to unbundle XPS printing would enhance competition.

What may differ from the DOJ/IE situation is the relationship between the OS market and the other product (browser or portable document) market. With browsers, there was a pretty convincing argument that by suppressing alternative browsers, Microsoft was helping to entrench its OS monopoly power, because of the likelihood that a rival browser would evolve into a platform for application development, thereby reducing lock-in in the OS market. It’s not clear whether there is an analogous argument for portable document formats – and if there’s not an argument that tying XPS to Windows hurts consumers somewhere else, then perhaps it’s okay to let Microsoft bundle XPS printing with Vista.

The other action by Microsoft, distributing XPS/PDF printing functionality separately from Office (via download only), isn’t so close to the arguments in the DOJ case. Recall that DOJ was willing to let Microsoft ship IE with Windows if the customer wanted it that way, as long as there was a way for customers (including PC makers) to get rid of IE if they didn’t want it, and as long as Microsoft didn’t try to interfere with customers’ ability to use competing browsers. The analogy here would be if Microsoft allowed PC makers and customers to disable the XPS/PDF functionality in office – for example, if they liked a competing print-to-PDF product better – and didn’t try to interfere with competing products.

The point of all this should not be to handcuff Microsoft, but to protect the ability of PC makers and end users to choose between Microsoft products and competing products.

Comments

  1. Ned Ulbricht says:

    With browsers, there was a pretty convincing argument that by suppressing alternative browsers, Microsoft was helping to entrench its OS monopoly power, because of the likelihood that a rival browser would evolve into a platform for application development, thereby reducing lock-in in the OS market. It’s not clear whether there is an analogous argument for portable document formats […]

    Don’t forget about Display PostScript and Display PDF. Portable document technology may have more in common with a browser than you’d think.

  2. Brandon Shatley says:

    As long as having the XPS support doesn’t somehow interfere with the PDF support, and especially since they wanted to offer PDF (the competitor’s product) by default, I don’t really see the problem. I agreed on the IE thing, but there’s a danger in stretching things this far. What next? Windows can’t be themeable by default because Stardock offers a program that handles that? The Spotlight-like search has to go because there is Google Desktop? There must be security holes in the default install because making a safe system would monopolize the anti-virus/spyware market?

  3. Brandon: MS having a near monopoly position in the OS arena, they are able to charge monopoly premia (and they do), which allows them to cross-finance add-on developments and dump them on the market at nominally lower price than the competition. Effectively you are paying for IE when you buy Windows, and IE is then nominally free. Also by virtue of owning their platform, they can control others’ access to it. Do you know what MS charges third-party software developers for access to documentation and supporting tools (MSDN)? And let’s not forget forcing unfavorable contract terms on OEMs.

    They have been purposely engaging in all of those monopolisitic practices, hence supervision and curbs are warranted.

  4. Brandon Shatley says:

    cm: Though I agree with what you’re saying and I disagree with the way Microsoft actively tries to lock in users and leverage its market share, I’m not sure how offering the ability to save as a PDF ties into any of that. Most other operating systems have included that ability by default for a while now, so it seems only fair to me that Microsoft could do the same. The market fairness should work both ways.

  5. Matthew Roy says:

    I think Ed hit the mark when he said that removing the XPS features from the installation disk(s) of office is a bit of a stretch. I think the move by Adobe is simply a way for them to protect their own monopoly on the “digital paper” market. As of right now, nearly everyone uses PDFs to store print media digitally. If XPS were to become widely availible (as it would if it came with Office) people might choose to use it instead of PDF to ditigally store documents.

    What Adobe is doing is exhibiting its own monopolist practices in order to try and prevent the average consumer (who is unlikely to download the add-on for Office), from having the choice of using XPS. In this case it is Adobe, not Microsoft who is exhibiting monopolistic behavior that warrants “supervision and curbs”.

  6. I hope nobody minds if I razz the winner, no matter which one it proves to be. Both Adobe and Microsoft are notorious monopolists and both of them are notorious for putting evil DRM into their document formats, ostensibly to stop the next Halloween Documents type leak and enable their customers to do likewise, but in actuality just to create more problems that make them money at their paid-support centres, enable more monopolistic behaviors (DRM is all about enforcing a monopoly of some sort or another, at root), and most crucially, gain the use of the blunt instrument of the DMCA to block Open Source from interoperating with their precious office document formats. MS would love nothing more than to see OpenOffice unable to interoperate with MSOffice, save perhaps to see Linus Torvalds drawn and quartered or something. DRM, “trusted computing”, and the DMCA provide the means to potentially stop Linux and OpenOffice from interoperating or even to criminalize them, and all non-proprietary software, entirely.

    Both sides are evil. The government system that is carefully weighing which one is being unfair to the other is bought by the industry — you don’t see them carefully weighing whether they’re both being unfair to open source, or whether DRM as a whole is unhealthy to society, or whether the DMCA should be repealed, or even just whether use of the DMCA should be very carefully monitored and limited to balance the interests of consumers, smaller providers, open source, the public domain, and fair use versus those of large corporations with lots of money. (And guess which of these needs government help the least? The ones getting the most out of existing laws; the ones with tons of money already; the big corps. Government and big corporations — consumers need less of both and more choice and influence regarding both. So do small businesses, hobbyists, and others. At the rate things are going it will be illegal to write software code without some kind of frigging license, which will raise the barrier to entry sufficiently to kill open source. I bet MS will push for exactly that, probably indirectly via its sock puppet the BSA, soon, and probably, ironically, on the grounds of safety, security, and reliability. Requiring people to get a license to code would, they’d argue, stop virus writers, cut down on shoddy third-party software that causes problems … you wouldn’t want just anyone writing code used in your friendly neighborhood nuclear plant after all, would you? Of course, this would neglect MS’s own horrible track record for security and reliability, the fact that wide peer review makes established open source franchises much safer in mission-critical apps than any proprietary stuff, nevermind that the vendor of the latter can just leave you in the lurch with no recourse; and most viruses and stuff come from overseas these days. And those that don’t probably mainly come from big evil corps, not bored antisocial stereotype nerds, to drum up business for antivirus apps they sell and to drum up business for everything else via spyware dropping.)

  7. Adobe does not meet the definition of a monopoly. Why pretend that it does?

  8. You’re joking, right? Let’s see…
    * They monopolize Acrobat-type portable document functionality, at least until this MS offering becomes widely available, if it does.
    * Their evil, proprietary behavior is notorious among Mac users going back donkey’s years. Fonts, documents, you name it — it’s hard to do anything on a Mac without doing business with Adobe. Almost as hard as without doing business with Apple.

    The scope isn’t as big as MS but they are still engaged in unpleasant, consumer-hostile behavior, and with DRM coming to PDF this is getting worse lately. Lock-in is obviously something they’d like, and the DMCA can now be used to stop competing software interoperating perfectly with the PDF format. This is about as Microsoft-like as it gets without that pretty little Windows logo.

  9. No I’m not joking. Stop writing and start reading about what the word monopoly means. Adobe doesn’t qualify.

  10. Right now, they have a lock on portable documents the same as MS does on PC operating systems. There are alternatives (TeX systems; Linux) but they are generally inferior in some ways and have a tiny fraction of the market share. I don’t see any real difference here. If there is one, feel free to point it out.

  11. Right now, they have a lock on portable documents the same as MS does on PC operating systems. There are alternatives (TeX systems; Linux) but they are generally inferior in some ways and have a tiny fraction of the market share. I don’t see any real difference here. If there is one, feel free to point it out.

    Stop insulting and contradicting me in public unless you intend to post something concrete supporting your position, rather than just rude demands telling me what to do and empty statements like “Adobe doesn’t qualify”. If you have a point to make, argue it as I do mine; if not, and you don’t have anything nice to say, just shut up, OK?

  12. Sorry for double post. First one claimed to have failed “timed out” or some such rot.

  13. First, if the only type of documents people post/share on the Web were PDF I could understand. But that’s not the case – people post Word and other types of documents all the time. Most documents on the Web are not PDF they are HTML or HTML and CSS. You may love the idea of PDF and put a lot of emphasis on what it does well – especially on the cross platform consistent presentation side. That’s fine. But it doesn’t make Adobe a monopoly.

    Second, other companies make software that will generate PDF files. That software is available for purchase and I believe some are open source. Please correct me if I’m wrong there. So I think even in the narrow PDF space you have non-Adobe options available to you that include inexpensive of free software. Again, I don’t see how you can claim Adobe is a monopoly. If you are not Microsoft and want to create software that generates PDF conformant documents are you required to pay Adobe outrageously high licensing fees? If not then why is Adobe a monopoly?

    Finally, you typed the words “shut up” in a browser. A browser is an application. Applications run inside operating systems. Microsoft has an operating system monopoly. Now compare Adobe’s current position in one particular type of narrowly defined cross platform document distribution system and Microsoft’s monopoly of the desktop/laptop operating system. I don’t think they are on the same playing field. Its not even close.

    Writing that Adobe is a monopoly doesn’t make it so. Having someone disagree with you on this one is not surprising. What is more surprising is when people try to argue that Microsoft is not a monopoly.

  14. Linux’s existence doesn’t make MS not a monopoly in the PC OS field, so why would LaTeX’s existence make Adobe not a monopoly in the portable-document field? (And no, a Word doc is NOT a proper portable document.) There’s also PostScript (.ps) files — actually Adobe’s invention too, but widely supported by free software, yet not as widely used as pdf. And I have yet to see a decent pdf VIEWER other than Acrobat Reader.

    Nevermind that pdf cannot be fully supported by any free software (or any non-Adobe software in fact) without violating the DMCA due to DRM features. MSOffice formats are moving in that direction also, and that will no doubt extend to XPS.

    Fact is Adobe is dominating one market in exactly the way MS is dominating another, and predatory business practises are well-documented for each companies in its respective market. If MS wants to horn in on Adobe’s turf, good for them, although I’m guessing it’s gonna turn out like AVP: whoever wins, we (consumers) lose. 😛

  15. If you don’t want to understand what the word monopoly means there’s nothing I can do to help you. Have fun posting.

  16. Let me jump into this. To be precise, the question is not whether Adobe has a monopoly, but whether Adobe has monopoly power. A company has monopoly power if it can increase its profits by raising the price of their product above the price level that would exist in a fully competitive market.

  17. There is an important difference between “market power” and “monopoly power.” Monopoly power requires more power to set prices than market power and that power must be sustained over a long period of time. For example Adobe did not have monopoly power when postscript was introduced – though for a time Adobe did have significant market power. Hewlett Packard’s introduction of PCL showed that another company could enter the market and that Adobe could not act as a monopoly in the page description language market.

    Also, the term “fully competitive market” is difficult to apply in any significant/important software market today. Some might argue it is impossible to apply in any real market. One reason Microsoft has a monopoly, or rather “monopoly power,” in the operating system market is because people want to buy an operating system that supports the applications they need to use to get their work done. At the same time, developing full-featured native software applications is a large, complex and therefore expensive undertaking. Porting native applications to other operating systems is hard work and expensive. I once used the Solaris version of Photoshop. It was painful – full of bugs and other problems. Adobe was wise to drop it. So again, the test of monopoly power is more than simple market power or the existence of a less than “fully competitive” market.

    The market for Web browsers (such as it is) is another example. Writing software is painful/expensive for incompatible browsers. It took years for browsers to coalesce around something approaching a set of standards to make AJAX viable. The introduction of a new software technology (especially a “platform”) often appears to give the company that introduced it significant market power. However, the steps required for non-operating system technologies to become so widely accepted that developers will adopt them sometimes limits the market power of the company that introduces them. Java/J2EE, Flash, and PDF are just a few different examples. For example Chizen was recently quoted as saying Adobe may have to stop charging for Flash in the mobile market to make the player ubiquitous.

    He says:

    “If I have to make a trade-off between ubiquity and revenue — as it relates to the mobile client business — I’ll go for ubiquity.”

    http://mobileopportunity.blogspot.com/2006/05/flash-versus-windows-can-adobe-break.html

    At the same time the former Macromedia was never able to leverage their ownership of Flash in the corporate server market. Flash Remoting was a financial failure – partly because it was too expensive. The high price gave people a reason to reverse engineer it. Today, open-source Remoting gateways dominate over the former Macromedia’s Remoting software. In the tools market you get the same thing. The Flex 2 IDE will be priced much lower than the Flex 1.x package and will no longer be tied to a server. The compiler will be free. Adobe/Macromedia could not sustain Flex 1.x’s high price. Even though Adobe/Macromedia “own” Flash they could not sustain high prices over the long term.

    Now, lets say you believe that Adobe “is evil” because it is a big corporation and has a strong interest in Digital Rights Management. That’s fine. If Neo doesn’t like big corporations with a litigious history there is something called free speech and I urge him to use it! But, for the last time, that does not give Adobe monopoly power or make Adobe a monopoly. Now, don’t get me wrong. I’m sure there are many people at Adobe who would love to have monopoly power – call them evil if you want to. There may even be executives in Adobe who delude themselves into thinking they are on the verge of acquiring monopoly power. But it doesn’t mean they have it or are likely to achieve it.

    The context right now for this run of blog comments is the conflict between Microsoft and Adobe over PDF and XPS. I believe it is a hopeless task to try to demonstrate that Adobe has any real monopoly power with PDF. To get PDF established as a pervasive technology Adobe has had to license their patents in a decidedly non-monopolistic way:

    http://partners.adobe.com/public/developer/support/topic_legal_notices.html

    If you don’t want to visit the page here is the important part:

    “Adobe desires to promote the use of PDF for information interchange among diverse products and applications. Accordingly, the following patents are licensed on a royalty-free, nonexclusive basis for the term of each patent and for the sole purpose of developing software that produces, consumes, and interprets PDF files that are compliant with the Specification”

    Also, I think claiming Adobe has monopoly power is impossible in the face of their pricing for products like Adobe Acrobat professional. While you may not like their prices there is no evidence there of real monopoly power.

    So let’s get back to something more realistic. Regardless if you like/dislike Adobe they do not have monopoly power (even if they would like to) and are just another market leader under attack by Microsoft which does have a tremendously powerful operating system monopoly. Microsoft is proposing to do two things: bundle PDF and XPS into the OS and Office while at the same time competing with Flash and elements like Illustrator and Dreamweaver in Adobe’s Creative Suite via WPF/E and the Expression suite.

    Bundling PDF will reduce Adobe’s income. Success at displacing elements of the Creative Suite will further erode Adobe’s income. Simultaneously, if XPS is successful it will replace PDF and destroy Adobe’s ability to contribute to a software market. So bundling PDF and XPS is a one-two punch. It reduces Adobe’s income on the PDF side while displacing PDF with XPS on the other side. Adobe does not have similar financial resources or tools to move into Microsoft’s domain. They are limited to using revenues (or if you prefer their market power) to finance their response to Microsoft. As Microsoft uses its OS to distribute competing software for “free” they will erode and may destroy Adobe’s market power.

    On a personal level I really don’t care about Adobe. But I’m sickened by the monopoly nonsense people have been writing about Adobe. Mostly I think many people (though perhaps not neo) just want more “free” features bundled into the next release of Windows and don’t care what corporations and markets are damaged or destroyed in the process. I guess it makes it easier to accept what Microsoft is doing to just say Adobe is as “evil” and “monopolistic” as Microsoft. But saying it just doesn’t make it true.

  18. Actually, what people like me want is to see lower prices across the board. And the destruction of DRM. Charging thousands of times the marginal cost of reproduction, quickly regenerating your one-time R&D expenditure and then pocketing the difference, needs to become a thing of the past. So must the excessive lobbying power of the BSA and Big Media.

  19. JHarris says:

    Who’s worse? Adobe or MS? Adobe software is more bloated and overly complex than anyone’s out there. If PDFs were to disappear there’d be no love lost from me. Macromedia had just released a fast-loading, slick, ergonomic alternative document reader that blew Acrobat out of the water. So Adobe bought Macromedia. Sounds a little GATESish, no? Syntrillium had a wonderful little audio editing product with Cool Edit 2K. Adobe killed it when they bought Syn and released their own successor product (based on CE Pro) called Audition. More bloat. Less ergonomics.

    I imagine all the software designers at Adobe are running 5GHz Dual Cores with 2 Gigs of RAM. Cause that’s what it takes to effectively run all their crap.