The New Cold War

Shifting alliances
Ten years ago, no one would have expected the U.S. government, which spent years trying to bust up Microsoft (Nasdaq: MSFT), to step in to support the Redmond whipping boy. But that's what's happening in unsubtle ways, and it's threatening to open a rift between the U.S. and European regulators, as described in this interesting Reuters article.

The heart of the issue is the European Commission's giddy celebration of its successful pre-emptive strike against Microsoft's Windows Media Player, a piece of also-ran software that European regulators see as such a potential threat -- despite reality -- that they insisted it be removed from Microsoft's OS, even though there's about zero demand for it. Europe's second-highest court gave the Commission the thumbs-up, and that's what's setting off the new cold war.

Staking a claim
The heavy fine imposed isn't an economic problem for Microsoft, but it is the tip of a wedge. The champagne corks were popping in Brussels because this was the first test of the EC's powers. It's a watershed moment, and the Court's decision grants the EC wide-ranging powers.

U.S. officials see the danger and called the ruling a threat to competitiveness and innovation.

The EU's position is that of a typical uber nanny-state: Bureaucrats know best, and they should get to decide how companies play. European competition commissioner, Comrade Neelie Kroes, for instance, says she doesn't want to put a specific number on a fair market share for the Windows OS, but she mentions figures that imply Brussels is aiming to hack away 40 percentage points or so. Why? Because she thinks that sounds about right. End of discussion.

A cultural rift
Ah, the joys of Belgium. As my home-town friend, Fool contributing colleague Rob "Sauna Fool" Aronen points out in his CAPS blog, this arbitrary paternalism is par for the course in Europe. He wants to start a business there (nearly identical to the one he ran in the U.S. for about a decade) and the Belgian cube-jockeys demand he show them his engineering degree -- as if that matters.

This isn't just a point for policy wonks to ponder. The European Commission is determined to take pre-emptive action against anything it sees as a potential abuse of a "dominant position." The idea that businesses be allowed to do their thing unless they are behaving in ways that harm consumers is a quaint, old U.S. notion. As such, the EC's clear goal is to protect businesses from each other, rather than let them duke it out in the marketplace.

Foolish final thought
Arbitrary market-share red zones will come to bite many successful companies. Intel (Nasdaq: INTC) is next up for the European headsmen, and I'm sure burgeoning "potential" monopolists Google (Nasdaq: GOOG) and Apple (Nasdaq: AAPL) ought to be looking over their shoulders.

The message to corporations is clear. Don't be too successful in Europe. What investors ought to wonder -- as well as citizens -- is whether desk pilots from the land of slow economic growth ought to be the ones to decide how and when to limit the success of global companies.