Not Going Soft on Microsoft

The European Union's competition authority has, in recent years, had to swallow one defeat after the other. It lost a case seeking to block the merger of Britain's Airtours and First Choice. It failed to prevent the MCI-Sprint merger in the US. And many others have followed.

But the EU often learns from its mistakes and these setbacks forced former Competition Commissioner Mario Monti to broadly restructure his competition office. The first fruits were born on Wednesday when Europe's second-highest court, the Court of First Instance, issued a preliminary ruling (the full trial begins next year) that Microsoft must pay the massive fines ($668.8 million) levied by the European Commission, and to abandon its competition-strangling practice of bundling its software. The Commission has been more cautious in developing its cases recently, and this time has shown that it can beat the army of lobbyists Microsoft has put together in Brussels -- an army dedicated to preserving what, by any definition, is a pure software monopoly.

The European Commission isn't asking for a massive paradigm shift in Redmond. It is simply asking Microsoft to play fair and to finally exhibit the type of sportsmanship the company has for so long shunned. Specifically, the company needs to offer a version of its Windows operating system devoid of the Windows Media Player and has to reveal enough of its source code to allow competitors to design server software that runs effectively on Windows-based machines. There's also the small matter of a €497 million fine levied for previous abuses committed by the company -- one with a long and well-documented history of agressive practices aimed at squashing its competitors.

The most significant aspect of the ruling is the capability the EU has shown of making a decision based strictly on business principles while leaving political interests aside. When the Bush administration came into office in 2001 aided by $2.5 million in Microsoft contributions, the Clinton administration-ordered breakup of Microsoft -- a move that might actually have spurred competition in the operating systems market -- was chucked out the window. Instead, the Justice Department agreed to a massively watered-down settlement. Only a few years and an admission of failure later, the investigation was reopened. The fact that the European Commission is continuing to pursue the case shows that, at least in the business arena, the EU can serve as a check-and-balance for US authorities if they allow themselves to become overly influenced by business interests. (More reactions to the Microsoft decision can be found in Thursday's Fishwrap. ) (11:20 a.m. CET)

Vladimir Putin: President and Oil Baron

During his visit to Germany on Tuesday, the always understated Russian President Vladimir Putin, who's lately been showing that his dry humor is just as powerful as his ability to scale back democracy , described the mysterious and successful bidders in the Yukos auction as "people with experience in the energy business." Turns out, he was right. Baikal Finance Group, which won the auction for the Yukos subsidiary Yuganskneftegas with a bid of $7 billion, is a Russian government straw man and was purchased by the Kremlin just 3 days after the sale. It didn't come as any surprise -- reporters this week found that Baikal had no offices, no Internet Web site, and no telephone number. In the end, Putin's government forced the breakup and auction of Yukos, Russia's biggest private oil company, so that it could be placed firmly back into the Kremlin's hands.

The Russian government's crusade against Yukos is fueled, so says the government anyway, by a spurious bill for back taxes totalling $27 billion. Now, the government will get its money back with billions more in oil profits for good measure. On Wednesday, the fictitious Baikal Finance Group was taken over by the government-controlled Rosneft, which will now control 15 percent of the country's total raw oil output. It's the first major state expropriation to take place in the country since the fall of the Iron Curtain.

Putin's strangle hold on Russia's fossil fuels was already as strong as steel. The Kremlin -- despite official protestations to the contrary -- has firm control over the natural gas monopoly holder Gazprom. In fact, it was Gazprom which was originally expected to buy Yuganskneftgas. A pending merger between Gazprom and Rosneft, though, means that Yuganskneftgas could wind up in the hands of Gazprom -- whose German financing for the Yuganskneftgas deal fell apart following a US bankruptcy court ruling on behalf of Yukos -- after all. When Putin wants something, it seems, there is very little the West can do about it.

In the end, there's probably little Yukos will be able to do to defend itself either -- Russian law prohibits lawsuits against the government and Yukos chief executive Mikhail Khodorkovsky, remains behind bars. Is he guilty of tax evasion? Who knows. But he has no been rotting in jail for 18 months with no trial in sight. (1 p.m. CET)

Christmas, East German Style

The trendy Christmas gift in Germany this year must have the architects of reunification reeling! This year, stores are expected to sell around 800,000 gift baskets packed with food stuffs popular back in the Communist times of East Germany -- and just like the old times, you won't find any bananas in them. The gift baskets are filled with Spreewalder pickles (made popular in the international hit film "Goodbye Lenin), sausages, Rotkaepchen (Little Red Riding Hood) sparkling wine, and crisp bread. Today they may be kitsch, but in the times of Erich Honnecker, when East Germans had to take dietary supplements to fill their stomachs because they couldn't get enough food, the gift baskets would have been positively luxurious. Kitsch aside, the gift baskets are true success stories in a reunited Germany where most industry and business in the East has failed. Spreewalder pickles can easily be found in stores in the West, and Rottkaepchen sparkling wine is one of the biggest brands in Germany. And apparently the gift baskets, cult favorites, are being ordered from as far away as Mexico and the United States. So what are you waiting for? (9:45 a.m. CET)

French Journalists Freed

A pair of French journalists held hostage in Iraq since August 20 were finally freed by their captors on Tuesday and are scheduled to arrive back home in France on Wednesday afternoon. Christian Chesnot of Radio France International and Georges Malbrunot of the daily Le Figaro spent four months in the hands of a group calling itself the Islamic Army of Iraq, and their release comes as a welcome relief following a series of brutal beheadings and slayings of hostages ranging from American contractors to Margaret Hassan, the British-Iraqi leader of the national branch of CARE.

But why did the terror group spare two journalists while others have been so violently and graphically murdered? The Arab television station Al-Jazeera reports having received a statement from the kidnappers claiming that the two were let go after it was proven that they were not American spies. Makes perfect sense, right? With 130,000 American troops in the country -- and who knows how many CIA agents as well -- it would be a natural decision for the US military to dispatch two Frenchies dressed as journalists in a car to go spy for them. Maybe terrorists do think all journalists are spies, but it still doesn't feel like a likely explanation.

A second explanation, offered by Francois Gere, head of the French Institute of Strategic Analysis, likewise doesn't sound quite right. Terrorists of the ilk seen in Iraq and elsewhere in the Middle East are unlikely to provide preferential treatment for the victims on the basis of their profession -- Hassan, after all, served as an aid worker helping Iraqis for the better part of four decades.

The statement sent to Al-Jazeera also claimed that the French government's opposition to the war in Iraq played a role in the hostage's release. Could it be that a government's decision to oppose the invasion of a Muslim country helps protect its citizens more than aggressively rushing after unpredictable dictators? The answer is to be found in another question. That's about like asking if the hostages would have been released if they had been American.

The most likely explanation, however, is also the easiest: There was likely money involved. After all, buying those explosives for car bombs isn't free, and keeping hostages fed long enough to shoot torture videos of them ain't cheap. Besides, terrorists aren't generally known for their sophisticated political analysis. (Wednesday, 2:02 p.m. CET)

Tis the Season to Get Plastered

Think tanks are a great thing. What would we do without them? For example, the Policy Exchange from England has done a survey to determine how citizens in G7 countries (USA, Japan, Germany, United Kingdom, France, Italy and Canada) change their habits during the Christmas season. Here, some highlights:

* In December, Britons drink 41 percent more than their monthly average. In the United States, the jump is only 28 percent. Germans get 36 percent drunker.

* In Germany, the murder rate rises by 6.4 percent leading up to Christmas. (Something to keep in mind about murders in Germany: Because guns are illegal, kitchen knives are the weapon of choice.)

* Church attendance spikes in all G7 countries with Germany leading the way. 240 percent more church goers show up than in other months. In the United States the rise is a modest 112 percent but Americans' church-going rate, at over 50 percent of the population, is higher than all other G7 countries.