The European Commission has warned Microsoft about tying security features into its new operating system, Vista, thus putting other security programs at a competitive disadvantage. A spokesman for the competition regulator, Jonathan Todd, is quoted by the New York Times as saying it was up to Microsoft, as "a near monopolist," to ensure the new software complies with antitrust rules (link here).

Microsoft has responded by suggesting it might have to delay the sale of Vista in Europe.

The regulator had previously ordered Microsoft to sell a version of the current operating system, Windows XP, without Windows Media Player. The stripped version is said to be a poor seller, given that XP with Player is still available. It remains to be seen whether the new requirement will effectively maintain competition.

Greg Mankiw comments on his blog about a Wall Street Journal article [subscription required, so I haven't read it] on the fashion industry lobbying for three years of monopoly power. Thus lies the road to serfdom. Here is an industry that is competitive and people copy each other like mad. Yet Raustiala and Sprigman have shown there is thriving innovation and plenty of profit for everyone involved. It is a great example of how well markets work without the artificial government interference of "intellectual property." Lobbying for government favors isn't about "promoting the progress of science and useful arts" but rather about "a conspiracy against the public, [and] some contrivance to raise prices."

The previously reported Plavix drug story gets more interesting (link here). The Economist suggests a few alternative explanations for why a patented drug holder and a competitive generic maker would do a deal rather than compete; that happened in the Plavix case, (although it was subsequently overturned by the government).

One reason might be to "to delay its introduction of a cut-price product". A second might be that "the cost and legal uncertainty associated with patent trials are simply too great." Finally, it may be that the firm may know that "its patent was mistakenly awarded, perhaps because the purported breakthrough was too minor or obvious."

David Balto, a former official at the Federal Trade Commission, is quoted as saying, "Branded pharmaceutical firms have been stretching the limits of what deserves a patent, and the courts are just catching up."

It seems they have a long way to go.

Monopoly loves to expand. Pharmacists around the world are finding ways to preserve their exclusive right to sell drugs. Do you want to buy "Plan B," a "morning after" contraceptive hitherto sold only as a prescription drug in America. Rather than allowing it to be dispensed freely, the FDA forced a "voluntary”"accord on Barr Laboratories, the drug's maker, for it to be sold from behind the pharmacist's counter. If an identity check reveals the purchaser to be under 18, Plan B will still require a prescription; if the buyer is 18 or over, the pharmacist can dispense it freely. This landmark decision could prove to be the thin edge of a very big wedge. The arrival of Plan B may herald the emergence of a class of pharmaceuticals unknown in America: behind-the-counter (BTC) drugs (link here)”.

Enough said.

The Economist magazine (though it calls itself a newpaper) reports on the recent US airwave auctions to provide additional band to wireless providers (link here). The bottom line seems to be that competition remains in the hands of existing firms.

"Despite hopes that a new national operator might emerge, the spectrum largely went to existing wireless firms (with the exception of a consortium of cable companies partly backed by Sprint).... The result is that today's broadband duopoly between the fixed-line telecoms operators and the cable companies is now moving into the wireless sector." Great news.

AFP reports that (link here)

Indian state Kerala Education Minister M.A. Baby said his government would promote the use of open source Linux operating systems along with Microsoft in high schools in Kerala, India's most literate state which has a population of 31.8 million.

"We are against monopolies of multinational companies in any sectors," he told AFP. "So we would like to provide equal opportunity for both Linux and Windows-Microsoft operating system in the school curriculum."

But "ideologically I support Linux and Free and Open Operating Systems for IT enabled-education in schools," he added.

Open source advocates will be heartened by this development, modest though it is, given the size of the world software market. Still, we will have to wait and see which operating system wins out. Competitive dynamics seem to favor the innovator. So far, Microsoft has stayed ahead by continuing to innovate and provide advantages to those who have already adopted its software.

In a case similar to one in the EU, South Korea's Fair Trade Commission found that Microsoft had violated its anti-trust law and must strip out Windows Live Messenger and Media Player, as well as pay a $34 million fine. XP will now be available stripped or with a link to a site with downloadable competing applications (link here). Whether this applies to sales of the forthcoming Windows Vista remains unclear.

A step in the direction of more competition, this does little to loosen Microsoft's lock on the operating system market. Most first-time computer buyers will take the easy course, using what comes on the new machine. Having learned to live with it, relearning a different OS is not a competitive option, and Windows retains the advantage from the many applications written for it arising from being the first to market.

The New York Times updates our earlier report on the drug patent dispute between generic maker Apotex and Bristol-Myers Squibb which claims a valid patent for Plavix, a blood thinner (link here).

A federal judge has now ruled that the challenged patent is valid but went on the allow Apotex to distribute what generic it has already put in the wholesale channel. Apotex will appeal the patent judgment. Bristol Myers expects a big cut in its profits this year as prices for the drug have been sharply cut.

More to come.

The Economist has a piece on a generic pharmaceutical maker challenging the patent holder. (linked here) Apotex, a Canadian generic firm, was coming out with its version of Plavix, a lucrative blood thinner. Sanofi-Aventis held the patent supposedly good till 2012 and marketed in the US through Bristol-Myers Squibb. Perhaps fearing the patent wouldn't hold up, Apotex was bought off until state Attorneys-General intervened, ending the deal, but still leading to a federal criminal investigation. Apotex went ahead and Sanofi responded by cutting the price of regular Plavix below the generic. The blessings of competition.

Walt Byers posted this to the pen-l mailing list.

The RIAA sues a miscreant for illegal downloading. The defendant dies. The compassionate RIAA asks the court to give the family 60 days to grieve, before it lowers the hammer.