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Being open about standards

Being open about standards

von Nee­lie Kroes | 10.06.2008

Credi­ble com­pe­ti­tion policy requi­res com­pe­ti­tion law enforce­ment. Car­tel cases, mer­ger cases, abuse of domi­nance cases.
But com­pe­ti­tion policy is not only about cases. It is about put­ting in place the con­di­ti­ons for com­pa­nies to deli­ver bet­ter goods and ser­vices to con­su­mers. So it must be infor­med by more than the indi­vi­dual cases.
If mar­kets are not deli­ve­r­ing as they should, then I want to under­stand the pro­blems, and find solu­ti­ons. That may mean enforce­ment, advo­cacy, or spe­ci­fic Com­mis­sion or natio­nal govern­ment policy initia­ti­ves.
In tech­no­logy mar­kets, I think it means all three.

We all know that the Com­mis­sion has found com­pe­ti­tion pro­blems in at least some tech­no­logy mar­kets. The Com­mis­sion has never before had to issue two perio­dic penalty pay­ments in a com­pe­ti­tion case… And there are other cases of alle­ged unla­w­ful con­duct pen­ding.

As an enforcer, I act only where there is a pro­ven bre­ach of the com­pe­ti­tion rules. But as a policy maker I take the know­ledge I gain as an enforcer, and apply that more gene­rally. If the pro­po­sals I come up with are groun­ded in the rea­lity of mar­kets, they will help to make mar­kets work bet­ter, whe­ther or not there is a bre­ach of the com­pe­ti­tion rules in the par­ti­cu­lar case.

What does that mean in the tech­no­logy sec­tor? Stan­dards are cle­arly more import­ant than ever. They often faci­li­tate eco­no­mies of scale but their real impact on tech­no­logy mar­kets is with inter­ope­ra­bi­lity.

The deve­lop­ment of elec­tro­nic com­mu­ni­ca­ti­ons net­works has seen a rise in the import­ance of inter­ope­ra­bi­lity bet­ween equip­ment used, bet­ween ser­vices pro­vi­ded, and bet­ween data exch­an­ged. Inter­ope­ra­bi­lity encou­ra­ges com­pe­ti­tion on the merits bet­ween tech­no­lo­gies from dif­fe­rent com­pa­nies, and helps prevent lock-​in.

Stan­dards are the foun­da­tion of inter­ope­ra­bi­lity.

Stan­dards may, of course, be pro­prietary or non-​proprietary. Much excel­lent tech­ni­cal deve­lop­ment has been dri­ven by non-​proprietary stan­dards – the inter­net is awash with acro­nyms for non-​proprietary stan­dards: HTTP, HTML and XML.
Many stan­dards bodies express a pre­fe­rence for non-​proprietary stan­dards. Non– pro­prietary stan­dards avoid the need for licence agree­ments and royal­ties. They avoid the need to ask per­mis­sion if you want to use or deve­lop the tech­no­logy – follow-​on inno­va­tion may be easier. They avoid sub­jec­ting the future deve­lop­ment of the stan­dard and the tech­no­logy to the com­mer­cial inte­rests of the technology’s ori­gi­na­tor.

Of course, pro­prietary tech­no­logy deve­lop­ment is vital to reward R&D invest­ment and inno­va­tion that would other­wise not be made. The patent sys­tem is a tre­men­dously effec­tive mecha­nism to create incen­ti­ves to inno­vate, and reward suc­cess­ful inno­va­tion.
Pro­prietary tech­no­logy is at the heart of Europe’s suc­cess in second and third gene­ra­tion mobile tech­no­lo­gies, for example. Intel­lec­tual pro­perty pro­tec­tion for tech­no­logy will always be necessary to give just rewards for invest­ment in R&D. There will always be an import­ant place for pro­prietary tech­no­logy and for­mal pro­prietary stan­dards.
Stan­dards may also emerge, de facto, from mar­kets: a par­ti­cu­lar ope­ra­ting sys­tem for example, or a par­ti­cu­lar docu­ment for­mat […].

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