09.10.11

Links 10/9/2011: Apple Loses to Linux in Europe, MeeGo Not for Sale

Posted in News Roundup at 11:42 am by Dr. Roy Schestowitz

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IRC Proceedings: September 9th, 2011

Posted in IRC Logs at 11:09 am by Dr. Roy Schestowitz

Enter the IRC channels now

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Cablegate: Director of Microsoft Netherlands Thought an Honorary Doctorate to Bill Gates Would Appease the Competition Commissioner

Posted in Antitrust, Cablegate, Microsoft at 10:46 am by Dr. Roy Schestowitz

Summary: Regulation against several companies including Microsoft and how Microsoft viewed the appointment of Neelie Kroes at the time

FROM the following “SENSITIVE” Cablegate cable we learn that, according Director of Microsoft Netherlands Michel van der Bel, “the company had had good relations with Kroes in the past, including the granting to Bill Gates of an honorary doctorate from Nyenrode University during Kroes’ tenure as President there.”

UNCLAS SECTION 01 OF 02 THE HAGUE 002040 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON [Economic Conditions], PREL [External Political Relations], 
PGOV [Internal Governmental Affairs], PINR [Intelligence], 
NL [Netherlands], EUN [European Union] 
SUBJECT: DUTCH CELEBRATE CAPTURE OF EU COMPETITION PORTFOLIO 
 
REF: THE HAGUE 01955 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE HANDLE ACCORDINGLY. 
 
¶1.  (SBU)  SUMMARY.  The Dutch are clearly satisfied and 
claiming victory over the appointment of Neelie Kroes-Smit 
(Kroes) as the new European Commissioner for Competition. 
Prime Minister Balkenende's strategy of holding out for a 
"heavy" portfolio appears to have paid off.  Both the 
Netherlands' and Balkenende's image are likely to get a boost 
from this success.  Kroes' reputation as a free-market and 
pro-Atlantic thinker could be a real plus for soothing 
tensions in the U.S.-EU relationship as well as opening a new 
era of dialogue between Brussels and big business operating 
in the EU.  END SUMMARY. 
 
¶2.  (U)  The Dutch press is hailing the appointment of former 
Transport Minister Neelie Kroes-Smit as the new European 
Commissioner for Competition as a real victory.  All August 
13 Dutch morning papers included front-page stories on the 
appointment of Kroes, who comes from an entrepreneurial 
Rotterdam family that founded a transport business in the 
Netherlands.  (See reftel for further biographic 
information.)  Most commentators acknowledged surprise but 
also satisfaction with new European Commission President 
Barroso's selection of Kroes for the prized job of regulating 
mergers and acquisitions within the European Union as well as 
state subsides.  Spokespersons for all major political 
parties have praised Prime Minister Jan Peter Balkenende for 
his "subtle" negotiating strategy and success in winning for 
the Netherlands what Liberals (free-market,conservative VVD) 
Lower House Leader Jozias van Aartsen called a "dream 
portfolio for a dream candidate."  (Kroes is a VVD member.) 
Christian Democratic (center right CDA) spokesperson Maxime 
Verhagen spoke of winning the "top prize."  Even the main 
opposition Labor (PvdA) spokesperson Frans Timmmermans, who 
had previously questioned Kroes' nomination by Balkenende and 
predicted that she would receive a less important portfolio, 
conceded his mistake and complimented Balkenende's cabinet 
and Kroes on the nomination. 
 
¶3.  (U)  Jacques Schraven, President of the influential 
VNO-NCW Employers organization also praised the "outstanding 
lobbying" of Balkenende, noting the importance of Kroes' 
position for establishing more "direct lines" for business 
and its boost for the Netherlands' image.  Other reports 
describe Barroso's appointment of Kroes and others as giving 
a larger role to smaller member states within the EU, 
injecting new life into an "ailing European economy," and 
acknowledging the Netherlands position as the largest net 
contributor to the EU.  Balkenende himself told the press 
that he was "very satisfied," describing Kroes' new job as a 
"core portfolio" in the Commission and her appointment as 
recognition of the key role the Netherlands has and will 
continue to play in the EU.  In an August 12 press conference 
shortly after the announcement, Kroes pledged to maintain 
good contacts with The Hague while not becoming a 
"figurehead" for the GONL in Brussels. 
 
¶4.  (U)  Former Belgian Commissioner for Competition Karel 
van Miert, who also previously held the Transport portfolio, 
publicly advised Kroes that the job's main challenge would be 
to maintain her independence while also proving her knowledge 
of business and her ability to judge issues objectively and 
coherently.  Van Miert praised Kroes, who had served as an 
advisor to Miert in the early 1990s while he was Transport 
Commissioner, for her energy and strength, noting that her 
formidable negotiating skills would serve her well.  He also 
implied that the anti-trust case against Microsoft, brought 
by outgoing Commissioner Mario Monti, could be a real test of 
her abilities, especially if the European Court of First 
Instance agrees to Microsoft's request to overturn Monti's 
decision.  The Director of Microsoft Netherlands Michel van 
der Bel refused to comment to the press on the case, but 
noted that the company had had good relations with Kroes in 
the past, including the granting to Bill Gates of an honorary 
doctorate from Nyenrode University during Kroes' tenure as 
President there.  (Kroes is also likely to inherit the task 
of reaching final settlement of the Commission's five-year 
anti-trust case with Coca-Cola.) 
 
COMMENT -- AT THE TOP IN BRUSSELS 
--------------------------------- 
 
¶5.  (SBU)  Balkenende's August 3 nomination of Kroes as the 
Dutch candidate for European Commissioner was initially met 
with some skepticism among political circles as well as 
annoyance with current Dutch Internal Market Commissioner 
Frits Bolkenstein's decision not to opt for a second term. 
VVD leadership actually decided in June to put Kroes forward 
as a candidate and subsequently reached agreement among the 
three coalition parties VVD, CDA, and Liberal Democrats 
(center left D66) not to name a particular candidate until 
Balkenende was able to negotiate for a "heavy" portfolio. 
Kroes apparently was always the front-runner, although 
Agriculture Minister Cees Veerman was an alternative for the 
Agriculture portfolio in the event that Balkenende's strategy 
failed.  Balkenende reportedly first raised the issue with 
Barroso during a Netherlands-Germany soccer match during the 
July European Championship in Portugal and the discussion 
continued during Netherlands-Portugal game.  Barroso 
continued to ask Balkenende for a female candidate, while 
Balkenende maintained that such an option was only possible 
if the Netherlands received a "heavy" financial-economic 
portfolio.  On Tuesday afternoon, August 3, Barroso made that 
promise by telephone, whereupon Balkenende announced the 
nomination of Kroes. 
 
¶6.  (SBU)  Balkenende's strategy appears to have paid off. 
Both the Netherlands' and Balkenende's image, both 
domestically and internationally, are likely to gain from 
this success, which comes on the heels of the selection of 
Jaap de Hoop Scheffer for the prestigious NATO SYG post. 
Meanwhile, both domestic and international press are lauding 
Kroes as a free-market and pro-Atlantic thinker, whose 
occupancy of the "most important" EU Competition job could 
help to calm tensions in the U.S.-EU relationship and open an 
era of dialogue between Brussels and wary big business.  END 
COMMENT. 
RUSSEL

For a little more about this theme, see the following cables:

• Cablegate: European Commission Worried About Microsoft’s Browser Ballot Screen Being Inappropriate
• Cablegate: Competition Commissioner Neelie Kroes Accused of “Undermin[ing] Support for Intellectual Property” in Microsoft Case
• Cablegate: Former Microsoft Lawyer Thomas Barnett and Majoras Butt Heads With EU Commission Over Microsoft Case
• Cablegate: US Government Assesses Value of New EU Commission to Itself

Cablegate helps those who study history. Next up we’ll look at some other themes. █

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Cablegate: Competition Commissioner Neelie Kroes Accused of “Undermin[ing] Support for Intellectual Property” in Microsoft Case

Posted in Antitrust, Cablegate, Europe, Microsoft, Patents at 10:22 am by Dr. Roy Schestowitz

Summary: A look at accusations from private companies, directed at the mere enforcement of interoperability and fair competition

“Attack” on IPR (the sacred cow) is how the US described Brazil's choice of a mostly American/international standard, OpenDocument Format.

In the following Cablegate cable (several parts culminating in ¶11), the sort of nonsense Kroes had to cope with for merely pressuring (or punishing) a monopoly abuser can be seen. It it also being rebutted in the cable.

VZCZCXRO5104
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHBS #0172/01 0371546
ZNR UUUUU ZZH
P 061546Z FEB 09
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC

UNCLAS SECTION 01 OF 03 BRUSSELS 000172

SENSITIVE
SIPDIS

JUSTICE FOR C. HARROP
STATE PLS PASS TO FTC FOR J. PARISI
PLEASE PASS TO USTR
STATE FOR E, EUR/ERA, EEB/TPP
NSC FOR KRISTINA KVIEN

NOT FOR INTERNET DISTRIBUTION

E.O. 12958: N/A
TAGS: ECIN [Economic Integration and Cooperation], ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], ECPS [Communications and Postal Systems], EUN [European Union]
SUBJECT: EU COMPETITION AUTHORITIES HOPE TO MAKE GOOD U.S.-EU
COOPERATION EVEN BETTER

¶1. (SBU) SUMMARY. DG Competition officials told USEU January
14 they hope to work closely with the Obama Administration to
improve already strong U.S.-EU competition policy cooperation.
Officials in the DG Competition Chief Economist’s office and
International Unit said bilateral cooperation has been strong
on mergers and cartels but can improve in the antitrust area.
The officials hoped that an Obama DOJ will move closer to FTC
positions on mergers and unilateral conduct by firms. DG
Competition’s chief economist stressed the increasing role of
economic analysis in EU competition case review, and said
high-profile cases against Intel and Microsoft support this
trend and have not weakened EU support for IP protection. The
officials seek to cooperate with the U.S. on support for new
competition agencies in India, China and elsewhere. While the
Competition Commissioner and Director General will change late
this year, DG COMP’s keen interest in engaging with new senior
U.S. officials offers a good opportunity to deepen this
important relationship. END SUMMARY.

DG COMP OFFICIALS SEEK TO IMPROVE ALREADY STRONG U.S.-EU
COMPETITION COOPERATION
——————————————— ———

¶2. (SBU) Dominique Van Der Wee, Unit Head for International
Relations at the European Commission Directorate General for
Competition (DG COMP), told USEU January 14 that Competition
Commissioner Kroes, Director General Philip Lowe, and other DG
COMP officials value highly their existing close relations
with U.S. competition officials at the Federal Trade
Commission (FTC) and Department of Justice (DOJ). Van Der Wee
said DG COMP sees a difference in antitrust enforcement
attitudes between FTC and DOJ, however, and expressed the hope
that incoming Obama DOJ officials will move toward FTC’s “more
aggressive” positions, particularly on mergers and unilateral
conduct by firms. He said that existing bilateral cooperation
has been strong on mergers and cartels, but can improve in the
area of unilateral conduct. He noted that a U.S.-EU agreement
in fall 2008 to establish high-level regular phone calls on
unilateral conduct cases, to function as an “early warning”
system of major actions, has yet to be implemented fully; he
hoped this could resume with incoming officials by March.

¶3. (SBU) Van Der Wee said there is “enormous interest”
throughout DG COMP in meeting incoming senior FTC and DOJ
officials, perhaps at the ABA Conference in Washington March
25-27.

¶4. (SBU) On February 2 USEU EconMin heard the same message of
cooperation from DG COMP chief economist Damien Neven and two
members of his team (Oliver Stehmann, deputy chief economist,
and Miguel de la Mano, economist). Neven said his office has
had good relations generally for the past few years with the
economists’ teams at FTC and DOJ, although in 2008, relations
were less active due to the pending U.S. presidential
transition. He said he had suggested recently to DOJ that the
annual chief economists’ exchanges be restarted, possibly in
July this year, and seemed to get a positive response. Neven
explained that working level contacts on mergers have
continued to be particularly strong, noting extensive DG COMP-
FTC discussions during consideration in late 2007 and early
2008 of Google-DoubleClick merger (NOTE: which both the U.S.
and EU approved. End note).

BUT CHALLENGES REMAIN OVER ANTITRUST COOPERATION
——————————————— —

¶5. (SBU) Neven noted that antitrust cooperation has been more
complicated, and suggested that more extensive U.S.
confidentiality requirements may limiting useful information
exchange after the USG has opened an investigation. He said
this leads the U.S. side “to ask lots of questions but not be
able to share as much.” (Note: U.S. and EU rules on
confidentiality waivers differ in some respects, but the U.S.
can share information with waivers. End note).

¶6. (SBU) Neven also pointed to the “wide gap” between FTC and
DOJ over unilateral conduct, which he said had made it more
difficult to establish points of common concern with the USG.
He said DG COMP hopes that the DOJ enforcement report on
Section 2 of the Sherman Antitrust Act was an “outlier,” in

BRUSSELS 00000172 002 OF 003

advocating a “more extreme position,” and thought this view
would change under the Obama team. (Note: the 2008 report
covered unilateral conduct by firms, and was not endorsed by
FTC. End note). Neven did say that Deputy Director General
for antitrust and mergers Nadia Calvino’s one conference call
in 2008 with DOJ and FTC was very productive, however, and
hoped these could continue.

ROLE OF EU CHIEF ECONOMIST IN CASE REVIEW
—————————————–

¶7. (SBU) USEU asked about Neven the evolving role of the Chief
Economist’s office in DG COMP review of competition cases.
Neven said there has been a consistent trend for stronger
economic input on “theory of harm” into case analysis, with
measurable results. (Comment: EU competition law has evolved
from a purely legal analysis to more emphasis over the last
decade on economic impacts in evaluating antitrust and merger
concerns. End comment). Neven highlighted the example of the
RyanAir-Aerlingus merger report from 2008, which contains 100
pages of economic analysis (of 400 total).

¶8. (SBU) Neven’s office details one to three staff to specific
DG COMP case teams, he continued. He said his team is
increasingly involved in sectoral inquiries, with three of his
staff working on the ongoing pharmaceutical inquiry. (Note:
DG COMP issued a preliminary report on its major
pharmaceutical inquiry in November; the final report is
expected in mid-2009). Neven’s office was less involved in
the influential 2005 energy sectoral inquiry, which led to the
proposed EU 3rd energy liberalization package. (Note: this
package remains under consideration by the EU Council and
Parliament. End note).

¶9. (SBU) Neven underscored, however, the “schizophrenic”
nature of his office, which remains independent from the case
teams even as it supports case review. He noted that the non-
horizontal merger guidelines, adopted a year ago, have led to
the issuance of different analyses than would have earlier
been the case. He also said his office had been heavily
involved in state aid review of the many recent financial
sector bailouts, and has played a strong policy development
role here.

CHIEF ECONOMIST: KEY CASES SUPPORT TREND TOWARD ECONOMIC
ANALYSIS, DON’T UNDERMINE IP RIGHTS
——————————————— ———

¶10. (SBU) USEU asked Neven’s views on Intel’s concerns that
the Commission’s seven-year case against the firm for
potential antitrust violations has been “politicized.” He
said it was strange that Intel didn’t respond to the
Commission’s second Statement of Objections (SO) charging the
firm with potential violations. He thought the European Court
of First Instance (CFI) correct in tossing out in early
February Intel’s argument for an extension of its time to
prepare its case. He said Intel may think the Commission has
been very selective in reviewing evidence, but said Intel has
itself been very selective in arguing its position. He said
that both SOs against Intel were economic effects-based,
rejecting Intel’s argument that the Commission dropped an
effects-based position in its second SO. At Intel’s hearing
last year, Neven said a “junior member” of the legal team had
stood up and said “remember the case law,” which doesn’t
directly require effects-based analysis, which Neven
considered the basis for Intel’s (unjustified) claim that the
Commission is ignoring economic effects in evaluating the
firm’s case.

¶11. (SBU) USEU raised concerns increasingly expressed by the
private sector concerns that DG COMP decisions have begun to
undermine support for intellectual property (IP) rights in
Europe. Neven disagreed with this view, declaring that the
2004 Microsoft decision was a special case soundly based on
refusal to supply, with the decision and subsequent CFI
decision expressly recognizing IP rights. His staff explained
that the recent Article 82 guidance paper incorporated these
experiences and lays out how to operationalize such special
tests.

BRUSSELS 00000172 003 OF 003

INTEREST IN COOPERATION ON THIRD COUNTRIES
——————————————

¶12. (SBU) Van Der Wee said DG COMP seeks to develop a
coordinated approach with the U.S. on technical support for
new third country competition agencies, beginning with India,
currently establishing its agency. He added that DG COMP also
seeks to encourage China to join the International Competition
Network (ICN), which may require asking Taiwan to change its
nameplate at ICN, a sensitive issue.

COMMENT
——-

¶13. (SBU) DG COMP clearly expects the advent of a new
Administration will bring changes to U.S. competition
enforcement, and hopes this will “bring the U.S. closer” to EU
positions on unilateral conduct and other key issues.
Competition Commissioner Kroes’ term will end with the
European Commission changeover at the end of this year, while
Director General Philip Lowe will be replaced by Alexander
Italianer, a Dutch economist with whom USEU has strong ties.
EU perceptions of prior U.S.-EU divergences in approach on key
competition issues may be exaggerated, but DG COMP’s keen
interest in engaging with new senior U.S. officials offers a
good opportunity to deepen this important relationship. END
COMMENT.

MURRAY

There are several cables related to this, but they do not show anything of particular interest, so we skip them. █

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Cablegate: European Commission Worried About Microsoft’s Browser Ballot Screen Being Inappropriate

Posted in Antitrust, Cablegate, Europe, Microsoft at 10:02 am by Dr. Roy Schestowitz

Summary: A look at the real views of regulators, to whom Microsoft was ‘selling’ the idea of false “choice” (where Internet Explorer is already installed by default)

THE FOLLOWING Cablegate cable draws attention to several disparate issues, some of which are unrelated to technology. But the part which we found most revealing (¶14) says that “Microsoft’s proposed “ballot-screen” remedy to the Commission’s case against Microsoft’s bundling of Internet Explorer with Windows concluded last Friday (Nov. 13)” and that it “showed some small concerns over screen design, layout, the number of security warnings Windows showed users installing new browsers, and one or two other small issues.”

We actually wrote about those same issues at the time, but we did not know that the European Commission too was sceptical [1, 2, 3, 4, 5, 6, 7, 8, 9]. Inside those posts are some points and arguments from around that time. These mostly got mentioned by Microsoft rivals.

VZCZCXRO7280
PP RUEHIK
DE RUEHBS #1591/01 3291353
ZNR UUUUU ZZH
P 251353Z NOV 09 ZDK ZUI RUEHSD 0004W 3350809 SVC
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE

UNCLAS SECTION 01 OF 03 BRUSSELS 001591 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/ERA, EEB/TPP/MTA, EEB/OIA 
DOJ FOR CALDWELL HARROP 
DOC FOR DAVID DEFALCO 
 
PLEASE PASS TO USTR DAVID WEINER AND FTC J. 
PARISI 
 
NOT FOR INTERNET DISTRIBUTION 
 
E.O. 12958:  N/A 
TAGS: ECIN [Economic Integration and Cooperation], 
ECON [Economic Conditions], 
EINT [Economic and Commercial Internet], 
ECPS [Communications and Postal Systems], 
EFIN [Financial and Monetary Affairs], ETRD [Foreign Trade], 
EUN [European Union] 
SUBJECT: KROES CABINET CHEF ON ORACLE-SUN, BANKING 
REVIEWS, NEXT COMMISSION DYNAMICS 
 
BRUSSELS 00001591  001.9 OF 003 
 
 
SUMMARY 
------- 
 
¶1. (SBU) Anthony Whelan, chef du cabinet to 
Competition Commissioner Neelie Kroes, told USEU 
November 20 that Kroes and DG COMP are carefully 
reviewing the complex arguments involved in the 
Oracle-Sun merger, and the potential concerns over 
Oracle's acquisition of Sun's MySQL open source 
database.  Key issues Kroes is reviewing include 
whether: MySQL's open source nature protects it from 
competition concerns (Kroes is skeptical); DG COMP 
concerns that Oracle wouldn't support developing 
MySQL into a stronger competitor to other existing 
lower-end databases; and interest in Oracle 
arguments that MySQL technically cannot be scaled up 
far enough to compete with some of these databases. 
He noted that Kroes and DG COMP officials' minds 
"are more open" to Oracle/Sun arguments than they 
would be in many SO cases, given the new open source 
issues involved. 
 
¶2. (SBU) Whelan said Kroes regretted missing the 
recent TEC meeting and continues to value her close 
relationships with U.S. competition officials.  He 
said she has spent a tremendous amount of time on 
state aid reviews of the many financial sector 
bailout packages member states have enacted during 
the financial crisis.  He said the Commissioner and 
DG COMP have no master plan for the state aid 
reviews, and acknowledged the importance of looking 
at the cumulative impacts of required actions on the 
banking sector.  Whelan noted the increasing 
possibility that Kroes will be reappointed to serve 
in the next Commission, mentioning rumors she could 
get the trade portfolio.   END SUMMARY. 
 
TEC AND COMPETITION CONSULTATIONS 
--------------------------------- 
 
¶3. (SBU) EconMin opened by mentioning the success of 
the recent Transatlantic Economic Council (TEC) 
meeting and noting it was unfortunate that 
Commissioner Kroes had been unable to participate. 
Whelan said Kroes had been looking forward to 
participating in the TEC and explaining Commission 
reviews of financial sector support packages, but at 
the last minute had needed to stay in Brussels to 
address some of those very reviews. 
 
¶4. (SBU) EconMin noted the long history of 
cooperation in competition policy issues, and 
expressed disappointment that the the planned U.S.- 
EU competition consultations had to be postponed. 
He noted USEU's commitment to continuing to 
facilitate close relations between our respective 
competition authorities.  Whelan said Kroes and DG 
Comp feel the same, noting Kroes' subsequent meeting 
in India with FTC Commissioner Kovacic, as well as 
Deputy Director for Antitrust Nadia Calvino's recent 
meeting in DC with DOJ Deputy AAG Molly Boast. 
 
 
FINANCIAL SECTOR STATE AID REVIEWS 
---------------------------------- 
 
¶5. (SBU) Whelan explained that Kroes has spent a 
tremendous amount of time on state aid reviews of 
the many financial sector bailout packages member 
states have enacted during the financial crisis.  He 
acknowledged that the results may lead to some 
transatlantic disinvestments and pullbacks.  The 
Commissioner and DG COMP have no master plan for the 
state aid reviews, but Whelan agreed the Commission 
should probably look at the cumulative impacts of 
required actions (such as divestments by ING and 
 
BRUSSELS 00001591  002.10 OF 003 
 
 
RBS) on the EU and transatlantic banking sector.  He 
noted the Commission's declared intention when 
adopting its restructuring guidelines that measures 
should not undermine the EU internal market.  He 
pointed out that the Commissioner does not insist on 
divestment of assets in particular regions (ex. E. 
Europe) and in fact wants to ensure member states do 
not "close" EU financial markets. 
 
¶6. (SBU) Whelan explained that the state aid reviews 
involve twice weekly joint meetings by DG COMP, DG 
MARKT, DG ECFIN and the Commission legal services to 
examine member state packages.  He said when the 
crisis hit last year DG COMP quickly received more 
resources to conduct the reviews, noting they hired 
former bankers and other experts to assist with the 
reviews.  He added that many of the guarantee and 
recapitalization schemes have already been 
reexamined at least once, to ensure they are working 
and are not market-distorting. 
 
ORACLE-SUN MERGER 
----------------- 
 
¶7. (SBU) After discussing state aids and Commission 
politics (below), Whelan turned to the Commission's 
investigation of the planned $7.4 billion Oracle-Sun 
merger.  He said Oracle had requested an 8-day 
extension to prepare their written and possible oral 
responses to the Commission's Statement of 
Objections (SO).  This is a positive sign, he said, 
that they are taking the Commission process 
seriously.  He said that some on the DG COMP case 
team felt Oracle had been "lazy" in its responses to 
requests for information, but agreed Oracle may not 
have expected the database concerns, since the early 
focus had been on potential JAVA issues.  He said 
concerns about Sun's MySQL open source database were 
brought to DG COMP by questionnaire responses from 
other parties over the summer. 
 
¶8. (SBU) Whelan acknowledged that Sun and Oracle are 
concerned that the issuance of an SO is a serious 
step, since very few mergers with SOs have been 
cleared unconditionally, but added that each case is 
totally different and that Oracle-Sun presents new 
issues for DG COMP in involving open source software 
models so extensively. 
 
¶9. (SBU) Whelan understands Oracle's existing 
databases and MySQL have different architecture and 
target different markets.  He noted that Kroes and 
DG COMP know the argument that open source software 
is by definition "pro-competitive," since the theory 
is that everyone has access to it and can contribute 
to improving open source programs, but said the 
Commission is examining subtle and complex 
counterarguments to this.  He said that in the 
dynamic, real marketplace in Europe, this open 
source argument needs to be examined. 
 
¶10. (SBU) Key questions DG COMP is considering in 
this case, Whelan said, include: 1) whether the 
"global public license" open source nature of MySQL 
somehow precludes potential competitors from using 
it to develop commercial products that could 
eventually compete with OracleQs databases; 2) in 
this connection, Oracle's assertions that 
technically MySQL cannot be scaled up to compete on 
Oracle's high end; and 3) whether Oracle has the 
incentive to support development of MySQL into a 
stronger program. 
 
¶11. (SBU) These concerns, Whelan said, are to some 
extent hypothetical, but then added that the 
Commission's merger control powers differ from those 
 
BRUSSELS 00001591  003.7 OF 003 
 
 
held by DOJ and FTC in the U.S.  In the U.S., he 
said, agencies can come back to a merger after it 
occurs, see the results, and take structural action 
if necessary.  The Commission doesn't have that 
possibility, he continued.  The Commission faces an 
incredibly high bar for subsequent action, he said 
(if it can show an Article 82 violation that can't 
be fixed by a behavioral remedy); hence the need for 
a thorough review now. 
 
¶12. (SBU) Whelan continued musing about whether the 
specific type of open source license MySQL has works 
well in practice; he noted that the most successful 
open source products often have a commercial 
sponsor, (ex. Red Hat), which allows for dual 
licensing.  The Commission's concern is not so much 
that MySQL would be re-privatized, but rather that 
Oracle might not provide strong support for the 
program.  The Commission does recognize, Whelan 
said, that strong support for MySQL from Oracle 
could make the database a stronger competitor to 
Microsoft and other lower-end database providers. 
 
¶13. (SBU) Whelan stressed that, given the newness of 
many of the open source issue involved in the case, 
"our minds are more open" than they tend to be in 
standard cases where an SO has been issued.  He said 
Oracle has the opportunity to demonstrate answers to 
many of the questions raised by the Commission (such 
as whether MySQL can technically be upgraded to be a 
major competitor to Oracle's existing databases.) 
 
MICROSOFT UPDATE 
---------------- 
 
¶14. (SBU) Whelan said that the 4-week market test of 
Microsoft's proposed "ballot-screen" remedy to the 
Commission's case against Microsoft's bundling of 
Internet Explorer with Windows concluded last Friday 
(Nov. 13).  He said the ballot screen results (under 
which MS will offer a screen with alternate internet 
browsers that Windows users can download) showed 
some small concerns over screen design, layout, the 
number of security warnings Windows showed users 
installing new browsers, and one or two other small 
issues.  Whelan said "we need to explore these with 
Microsoft" but implied that they were not major 
issues, and reinforced the impression that 
Commissioner Kroes sees this case as nearly 
resolved. 
 
KROES IN THE NEXT COMMISSION 
---------------------------- 
 
¶15. (SBU) Whelan said that while three weeks ago 
there seemed to be zero possibility of Kroes being 
reappointed to the Commission, the Dutch political 
dynamic has since changed.  Kroes is very media- 
savvy in the Netherlands, Whelan noted, and the 
Dutch media have begun a campaign to renominate 
here.  The government is "in the doldrums," he said, 
and there is public resistance to sending one of 
Prime Minister Balkenede's "party hacks" to the 
Commission.  Kroes is seen as tough on banks, which 
is appealing, he added, and PM Balkenende is now 
under some pressure to support Kroes.  Whelan 
concluded that her chance of reappointment has 
grown. (Note: Kroes was subsequently reappointed by 
the Dutch government on November 24.  End note). 
Whelan acknowledged the rumor that Kroes would get 
the trade portfolio but said he had no corroboration 
of this at all. 

Eventually Kores stayed in the Commission (not in the competition part of) and Microsoft now engages in new anti-competitive abuses, mostly using patents. Microsoft cannot help being brutal and cheating while nobody is watching and threatening with fines. █

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Cablegate: US Government Assesses Value of New EU Commission to Itself

Posted in America, Cablegate, Europe at 9:44 am by Dr. Roy Schestowitz

Summary: A look at how the United States views the newly-elected (2010) European Commission

“Barroso’s announced line-up of the policy portfolios for the new Commission that takes office on/about February 1 has mostly good implications for U.S. economic policy interests,” asserts a cable from just over a year ago (marked “SENSITIVE”). There is no smoking gun that we can see there, but it helps to know how the US portrays politicians who sell Europe out.

Take for example Mr. ACTA (Karel de Gucht). The cable says: “New Trade Commissioner Karel de Gucht (Belgian Foreign Minister until September) takes over the Transatlantic Economic Council; known for his straight-talk, de Gucht is also seen as someone who can close deals” (no matter how bad they are).

Mr. EU Patent (software patents) Michel Barnier, whom we wrote about here, here, here, here and here, is said to “bring a decidedly French and political approach to the internal market and financial services, but will be offset by a new British Director General, Jonathan Faull” (we cannot find his position on patents anywhere).

“Spanish Commissioner Joaquin Almunia moves from ECFIN to Competition,” says the cable, “where he will bring his economics background to touchy competition policy cases (such as Oracle/Sun) and will likely continue Neelie Kroes’s tough line on bank state aids” (Neelie Kroes is talked about later and we already know that the US called her "sensitive")

Then it speaks about Siim Kallas, who has been helping Microsoft. We quite like the part about Vassallo, whom Microsoft hired to help lobby the EU after OOXML corruption and it evidently worked based on other diplomatic cables. The following Cablegate cable points out that “[c]ertainly this is the view of the current President of Amcham EU, Vassallo before he joined General Electric and now Microsoft, who knows Dalli well.”

Here is the full text.

VZCZCXRO5031
RR RUEHIK
DE RUEHBS #1616/01 3351625
ZNR UUUUU ZZH
R 011625Z DEC 09 ZDK DUE TO ZES-2
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHMO/AMEMBASSY MOSCOW
RUEHOT/AMEMBASSY OTTAWA
RUEHKO/AMEMBASSY TOKYO

UNCLAS SECTION 01 OF 10 BRUSSELS 001616 
 
SENSITIVE 
SIPDIS 
 
STATE PASS TO NSC KVIEN, BELL, AND OMB/OIRA 
 
E.O. 12958: N/A 
TAGS: ECON [Economic Conditions], ETRD [Foreign Trade], 
ECIN [Economic Integration and Cooperation], 
EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], 
EAGR [Agriculture and Forestry], EIND [Industry and Manufacturing], 
ENRG [Energy and Power], ECPS [Communications and Postal Systems], 
EAIR [Civil Aviation], EWWT [Waterborne Transportation], 
KIPR [Intellectual Property Rights], KSCT, 
SENV [Environmental Affairs], EUN [European Union] 
SUBJECT: BARROSO'S NEW COMMISSION SHOULD BE GOOD 
FOR U.S. ECONOMIC POLICY INTERESTS 
 
BRUSSELS 00001616  001.4 OF 010 
 
 
¶1. (SBU) Summary: EU Commission President 
Barroso's announced line-up of the policy 
portfolios for the new Commission that takes 
office on/about February 1 has mostly good 
implications for U.S. economic policy interests: 
 
-- New Trade Commissioner Karel de Gucht (Belgian 
Foreign Minister until September) takes over the 
Transatlantic Economic Council; known for his 
straight-talk, de Gucht is also seen as someone 
who can close deals; 
-- On capital markets, Frenchman Michel Barnier 
may bring a decidedly French and political 
approach to the internal market and financial 
services, but will be offset by a new British 
Director General, Jonathan Faull; 
-- Finn Ollie Rehn will bring his Oxford PhD in 
economics to his new Economic and Finance 
position, where he'll play a role in the G-20 even 
as he tries to manage winding down member state 
deficits; 
-- Spanish Commissioner Joaquin Almunia moves from 
ECFIN to Competition, where he will bring his 
economics background to touchy competition policy 
cases (such as Oracle/Sun) and will likely 
continue Neelie Kroes's tough line on bank state 
aids; 
-- Kroes herself takes up the information and 
communications technologies Q including a new ten- 
year digital economy plan and telecoms 
liberalization -- from Viviane Reding; 
-- Climate change may be a problem with Dane 
Connie Hedegaard in the lead, but environment 
otherwise may be less problematic with Slovene 
(and former S&T Commissioner) Potocnik; 
-- Energy will be with the new German 
Commissioner, Gunther Oettinger, who may try to 
smooth over some of the EU-Russia tensions over 
supply disruptions; 
-- Estonian Commissioner Siim Kallas takes up the 
transport portfolio (minus space), along with the 
U.S.-EU aviation negotiations; 
-- Agricultural policy goes to Romania's former 
agricultural minister; this, and the shift of 
biotech away from DG ENV to DG SANCO (and former 
Research Commissioner Potocnik) may bode well on 
biotech; 
-- Industry and entrepreneurship, supplemented 
with space, goes to the Italian Tajani, who will 
bring a lower-profile to a portfolio now focused 
on the woes of the auto sector; and 
-- Regulatory cooperation is more strongly 
centralized in the SecGen's office; the Maltese 
Commissioner who will have the re-combined Health 
and Consumer portfolio, where so many 
transatlantic regulatory issues lie (food safety, 
consumer protection) is well respected by the 
Amcham President. End Summary. 
 
¶2. (U) EU Commission President Barroso announced 
his new Commission on Friday, November 27, just 
three days after the Netherlands nominated the 
last of the Commissioners-designate.  The new 
line-up, which goes into effect only after 
extensive hearings before and approval by 
Parliament in January, has significant 
implications for U.S. economic policy, since the 
Commission has a lead policy role in the European 
Union Q itself the world's largest economy, 
largest trader, largest donor and heavy-weight in 
virtually all international economic fora, even 
where not directly a member. 
 
¶3. (U) Of the 27 EU Commissioners (one per member 
state), 18 have portfolios with significant 
economic policy content, affecting member state 
fiscal policy, financial services, trade, aid, 
competition policy, climate and environment, 
energy, telecommunications and many other areas. 
In each of these, the Commissioner proposes both 
policy initiatives and EU legislation, and must 
then get measures approved by the 27 member states 
in the EU Council and the European Parliament 
all the while negotiating or talking to us and the 
many other countries affected by the EU's policy 
 
BRUSSELS 00001616  002.4 OF 010 
 
 
choices. 
 
¶4. (U) This cable provides a brief resume of the 
key economic policy Commissioners and the top 
U.S.-EU issues they will handle by policy area, 
divided into four themes: external (trade, 
customs/taxation); fiscal/macro; "horizontal" 
policies; and sector-specific portfolios 
(agriculture, industry and the like).  The new 
High Representative for Foreign Affairs and 
Security Policy, Cathy Ashton, who will also have 
a significant economic policy role especially with 
respect to U.S.-EU cooperation on third country 
issues, is not covered here; see London 2623. 
Similarly, the new Commissioners for Justice and 
Home Affairs, and for enlargement and development, 
will be treated separately, although all deal with 
economic policy issues, including the increasingly 
difficult one of data privacy. 
 
General Assessment 
------------------ 
 
¶5. (SBU) In terms of economic policy, Barroso's 
apportionment of the portfolios strikes us as 
being generally favorable to U.S. interests: 
Barroso appears to have reinforced both his 
generally liberal economic reform instincts and to 
have struck a note of independence from the big 
four member states.  The two areas where we see 
the greatest potential for problems are in 
internal markets and services, where Paris appears 
to have wrested for Michel Barnier the control it 
sought over capital markets (although Barroso 
offset this by appointing a well-respected Brit as 
the new DG MARKT Director General under Barnier), 
and in climate change.  Interestingly, none of the 
four big member states got the high-profile trade 
and competition policy portfolios, which went to 
the relatively strong Belgian and Spanish 
Commissioners. 
 
External Economic Policy Q Trade, Customs 
----------------------------------------- 
 
¶6. (U) The Commissioner for Trade is our key 
economic policy interlocutor in the Commission. 
The Commissioner, who negotiates trade agreements 
on behalf of the EU and its 27 member states, is 
the U.S. Trade Representative's primary European 
contact, although the remit also covers other 
aspects of bilateral and multilateral economic 
relations.  This broader role expands with the new 
Commission Q President Barroso used the occasion 
to assign responsibility for the Transatlantic 
Economic Council (TEC) Q the U.S.-EU 
"intergovernmental cabinet meeting" on economic 
policy Q to the Trade Commissioner.  In addition, 
the Lisbon Treaty that goes into effect December 1 
gives the incoming Commissioner a major new policy 
area Q negotiating international investment 
protection agreements, previously the purview of 
the member states, anda new political headache: a 
significantly inceased role for the European 
parliament in trae negotiations (septel). 
 
¶7. (SBU) Karel de Gucht, the Belgian who has been 
Development Commissioner for only two months (he 
replaced Louis Michel when the latter joined the 
European Parliament this summer), was a surprise 
choice for the Trade Commissioner position, not 
least as he comes from a small member state.  A 
Flemish Liberal (center-right, with more free 
trade tendencies), the 55 year-old de Gucht has 
been Belgium's Foreign Minister for the past five 
years; he also has extensive EU experience through 
14 years in the European Parliament.  De Gucht has 
won a reputation as a straight-talker (including 
with blunt statements about human rights in some 
developing countries), but he's also portrayed as 
politician who can reach compromises.  De Gucht's 
Chief of Staff, Marc Van Heukelen, an economist 
who is extremely close to de Gucht and who headed 
the U.S. Office in the Commission's External 
Relations Department for the past two years, will 
 
BRUSSELS 00001616  003.4 OF 010 
 
 
bring a strong interest in transatlantic relations 
as well as extensive experience in the TEC to the 
new Commissioner. 
 
Taxation/Customs: 
 
¶8. (U) The Commissioner for Taxation and Customs 
(TAXUD) works more with DHS and CBP on border 
security issues than with Treasury on taxation, 
where the EU's role is generally limited to 
internal indirect taxes (VAT).  Current 
Commissioner Kovacs has focused in his dealings 
with us on our 100 percent container scanning 
requirement, but at the last TEC meeting he was 
more balanced, underlining the EU's equally strong 
interest in preserving the integrity of the 
container system.  We have a fairly good working 
relationship with the Commissioner's services, DG 
TAXUD, on such things as WCO rules (where the EU 
has become less helpful recently) and on IPR 
enforcement, where we've done a joint seizures of 
counterfeit semi-conductors under Operation 
Infrastructure. 
 
¶9. (SBU) Lithuanian Algirdas Semeta may bring a 
slightly more fiscal-oriented approach to the 
TAXUD role. A Member of the European Commission 
since July 2009, the 47 year-old Semeta graduated 
as an economic mathematician from the "Faculty of 
Economic Cybernetics and Finance" of Vilnius 
University in 1985 and found himself Chairman of 
the Securities Commission from 1992-1997 and 
Minister of Finance from 1997 to 1999, a position 
he held again before being appointed, in July 
2009, to the European Commission responsible for 
Financial Programming and Budget. 
 
Overall Economic Policy Q ECFIN, Budget and 
Regional Policy 
--------------------------------------------- ----- 
-- 
 
ECFIN: 
 
¶10. (SBU) The Commissioner in charge of Economic 
and Finance issues helps guide EU member state 
fiscal and Eurozone monetary policy, although more 
through suasion than direct control.  The 
Commissioner lays out the broad economic policy 
guidelines meant to direct member state fiscal 
policy; issues warnings about, and recommends 
corrective steps for, "excessive" member state 
deficits; and represents the Commission in the 
Eurogroup "troika" (with Eurogroup Chair Juncker 
and ECB President Trichet), including in the G-20 
and in IMF-related issues such as balance of 
payments support.  Spaniard Joaquin Almunia, the 
outgoing ECFIN Commissioner, developed credibility 
in this role, including in bringing excessive 
deficit procedures against the UK, France and 
Italy.  Indeed many thought it likely Almunia 
would remain at ECFIN, although this may have 
become uncomfortable for him with the tough 
measures ECFIN may have to bring against Madrid 
for its growing fiscal problems. 
 
¶11. (SBU) Certainly Finnish Commissioner Olli Rehn 
was not the first name that leapt to mind as 
Almunia's replacement, but as Enlargement 
Commissioner he too has developed a reputation as 
a strong character, openly disagreeing with even 
big member states on such sensitive issues as 
Turkey's EU accession and the Balkans.  Rehn, 46, 
is in the Liberal group.  He was a member of the 
Finnish Parliament from 1991 to 1995, and a Member 
of the European Parliament (MEP) from 1995-1996, 
becoming head of Cabinet for Enterprise and 
Information Society Commissioner Liikanen from 
1998 to 2002.  Liikanen has headed the Finnish 
Central Bank since Rehn became Commissioner in 
2004, following a year as Economic Adviser to the 
Finnish Prime Minister.  Rehn, who comes into his 
position representing one of the EU member states 
seen as innovative, competitive and well-managed, 
studied economics, international relations and 
 
BRUSSELS 00001616  004.2 OF 010 
 
 
journalism at Macalester College in Minnesota, and 
has a PhD in international economics from Oxford. 
The combination of Rehn's representing fiscally- 
prudential Finland and his own strength of 
character should help him push fiscal laggards 
towards consolidation across the EU, although he 
will likely also listen closely to the political 
guidance of Barroso. 
 
Budget and Regional Policy: 
 
¶12. (SBU) At about $150 billion Euros, the EU 
budget does not have much macro impact in the EU 
economy Q in fact, it's explicitly limited to just 
over 1.2 percent of EU GDP (while the member state 
governments collectively spend closer to 50 
percent) and the EU has a constitutional balanced 
budget requirement.  That said, EU funds and 
guarantees can play an important role in EU 
support for third countries, and have a 
significant impact in supporting the new Central 
European members (see USEU Brussels 382).  And 
because the budget is a zero-sum game, negotiating 
any changes in it with the European Parliament can 
be extremely difficult. 
 
¶13. (SBU) In this sense, Barroso's decision to 
appoint Poland's Janusz Lewandowski as Budget 
Commissioner is significant. A 58 year-old 
economist who was active in the Solidarity 
movement and who has lectured at Harvard, 
Lewandowski became Chair of the EP's Budget 
Committee when he became an MEP in 2004, and by 
this time knows the ins and outs, as well as the 
institutional tensions, of the brief.  Assigning 
regional policy (the manager of the substantial 
amount of the EU budget that goes to Central 
Europe and other poorer regions) to Austrian 
Johannes Hahn also makes sense, as Austria has a 
strong interest in the health of the Central 
European economies and Hahn will also wield the 
funds that go toward rural development, an 
important consideration for the Austrian 
agricultural sector.  Hahn, who has a doctorate in 
Philosophy and who often goes by the nickname 
"Gio," has served as Austria's Federal Minister 
for Science and Research since 2007. 
 
Horizontal Policies Q Competition, Internal 
Market, S&T, Climate, Environment, Health and 
Consumer Affairs 
--------------------------------------------- ----- 
- 
 
¶14. (U) The main "horizontal" EU economic policies 
are competition, internal markets, research and 
development, environment, health and consumer 
protection (as well as labor and education, but 
these two policy areas are not considered in this 
cable), all issue areas of increasing importance 
to transatlantic economic relations. 
 
Competition: 
 
¶15. (SBU) The Competition Commissioner is 
generally seen as the most powerful economic- 
policy person in the Commission behind the 
President, as this is the one area where the 
Commission has autonomous power.  Current ECFIN 
Commissioner Joaquin Almunia thus joins a long 
line of well-known predecessors: Neelie Kroes, 
Mauro Monti, Karel van Miert, Sir Leon Brittan and 
Peter Sutherland to name the most recent.   Many 
of these fought and won highly-publicized battles 
with U.S. giants (Microsoft, Intel, Oracle, Sun, 
GE, Honeywell, Boeing) over the impact of mergers 
or dominant positions in the EU market, but they 
have been equally tough on many top European 
firms.  More recently, the Competition 
Commissioner has also played a key role in 
ensuring that massive state aid flowing to 
European banks and other firms (including General 
Motors) in the wake of the crisis do not distort 
competition, often ordering remedies that could, 
for example, decrease the EU presence in U.S. 
 
BRUSSELS 00001616  005.4 OF 010 
 
 
financial service markets. 
 
¶16. (SBU) As an economist and Commissioner who has 
been deeply engaged in the EU response to the 
financial and economic crisis, Almunia, 61, is 
certainly well-versed in many of these issues.  He 
is expected to take a lower-profile on many of the 
competition and state aids cases, and his presence 
may well help strengthen the voice of the Chief 
Economist in DG COMP (potentially to the benefit 
of U.S. firms under scrutiny).  Before coming to 
Brussels, Almunia was twice a Minister in Felipe 
Gonzalez's Socialist government, and indeed led 
the party for three years, standing unsuccessfully 
for Prime Minister in 2000.  Some wonder whether 
he won't be softer on state aids given his 
political past, but his job is to ensure bigger 
member states don't support their industry to the 
disadvantage of weaker.  And, as one of the older 
Commissioners, he may not anticipate returning to 
political life. 
 
Internal Markets and Financial Services: 
 
¶17. (SBU) The Internal Markets portfolio was among 
the strongest when the then-European Community 
implemented the Single Market; with enlargement a 
considerable amount of its authority has seeped 
away to other sectoral Commissioners.  It remains, 
however, the voice to be reckoned with in the 
Commission on Financial Services and the EU's 
response to the financial crisis.  Once seen as a 
"liberal Anglo-Saxon" on capital markets 
regulation, in the aftermath of the financial 
crisis current Irish Commissioner Charlie McCreevy 
demonstrated that Commissioners as politicians can 
and will over-ride their professional services, 
and a number of the Commission's proposals on 
hedge funds and private equity, derivatives and 
capital requirements have created frictions with 
Washington, London and New York.  In fact, 
McCreevy is reported to have gone around the 
Commission in getting the EP to propose an 
amendment on derivatives that essentially forced 
the industry to "volunteer" to commit to a central 
clearing party platform. 
 
¶18. (SBU) Michel Barnier, a French conservative 
MEP who has served as Foreign Minister, EU 
Minister and EU Commissioner (1999-2004), is no 
stranger to Brussels or European politics.  Nor is 
he a stranger to transatlantic economic issues 
as French Agriculture Minister in 2008, he created 
the political backlash that defeated a Commission 
proposal to finally end our long-standing "chicken 
wars."  Barnier does, however, seem a bit of a 
stranger to the financial services portfolio, and 
France's intense lobbying to have its Commissioner 
take this up implies Paris may try to take a more 
hands on approach through Barnier.  This is 
undoubtedly one reason why Barroso announced, when 
answering questions about this assignment, that he 
would assign the highly-respected Jonathan Faull, 
now Director-General for Justice and Home Affairs, 
to head DG MARKT under Barnier.  Both men are 
likely to bring a strong emphasis on general 
services liberalization and IPR protection to DG 
MARKT, another area of critical interest to us. 
 
Research, Innovation and Science: 
 
¶19. (SBU) The Research, Innovation and Science 
Commissioner oversees the EU's 50 billion euro 
Seventh Framework Program as well as its network 
of Joint Research Centers.  It is the main 
counterpart for the extensive U.S.-EU Science and 
Technology Agreement, has close ties to virtually 
all USG scientific agencies, including NSF, NASA, 
DOE and others; the Commissioner sits on the U.S.- 
EU Energy Council established at this month's 
U.S.-EU Summit. 
 
¶20. (SBU) Shifting the S&T portfolio to McCreevy's 
Irish successor, Maire Geoghegan Quinn, is 
immediately appealing given Ireland's reputation 
 
BRUSSELS 00001616  006.2 OF 010 
 
 
(now somewhat tarnished) as a "tiger" economy with 
substantial U.S. high tech investment.   (Indeed, 
Geoghegan Quinn was reportedly once a member of 
the Board of the Ganley Group, a generally high- 
tech private-equity investor owned by anti-Lisbon 
Treaty activist Declan Ganley.)  Geoghegan-Quinn 
will bring to the Commission nearly ten years on 
the EU Court of Auditors, where she gained in- 
depth insights into the workings of Commission 
Programs, including the Research Framework 
Programs.  A well-known Irish politician, 
Geoghegan-Quinn, 59, became the first female 
member of the Irish cabinet in 1979, and was 
subsequently Minister for Tourism, Transport and 
Communications and for Justice before retiring 
from political life in 1997.  Some of her actions 
reducing sentences may come up in her EP hearings. 
 
Climate: 
 
¶21. (U) Although he announced some weeks ago that 
he would create a "Commissioner for Climate 
Action" to reinforce the EU's intention to achieve 
its ambitious "20-20-20" greenhouse gas reduction 
goals, Barroso used the naming of his new 
Commission to spell out what this means, 
transferring to the new Commissioner most of the 
climate change division of DG Environment.  The 
Commissioner's responsibility is explicitly cross- 
cutting, working most closely with the 
Commissioners of Energy and the Environment. 
 
¶22. (SBU) And Barroso could not have signaled the 
seriousness of his intent more clearly than by 
appointing Dane Connie Hedegaard to this position. 
Now Climate and Energy Commissioner of the Nordic 
country, Hedegaard has the government's lead 
preparing the December Copenhagen meeting of the 
parties to the UN Framework Convention for Climate 
Change, COP-15.  Globally well-known (one of 
Time's Top 100 newsmakers for 2009), Hedegaard, 
49, is seen as a dynamic if media-hungry 
politician, who may run into conflicts with those 
in the College who see a need to be more 
"realistic" in transforming the European economy. 
(These intra-college tensions will ensure that 
Barroso and his Secretary General retain 
considerable influence over climate policies.) 
Embassy Copenhagen notes that while Hedegaard has 
been a sometime critic of U.S. climate policy, she 
is conversant with U.S. domestic climate politics 
and has excellent personal climate contacts on the 
Hill.  She has been willing to engage 
constructively with the Embassy and U.S. 
officials. 
 
Environment: 
 
¶23. (U) In ways, the EU focus on climate change 
has overshadowed many of the other aspects of DG 
Environment, which, like the EPA, is a major 
regulator in Europe, proposing legislation and 
regulations on chemicals, energy-efficiency, 
biofuels sustainability, pesticides, air and water 
quality and many other areas of direct relevance 
to U.S. exporters and companies invested in 
Europe.  While splitting out climate change from 
DG ENV may not be to the liking of Director 
General Karl Falkenberg, it may help provide much- 
needed political attention to these other areas. 
 
¶24. (SBU) In this sense, the appointment of 
Slovene Commissioner Janez Potocnik to the post of 
Environment Commissioner should be positive for 
us.  An economist, the 51-year-old Potocnik has 
done well as Science Commissioner over the past 
five years, and has demonstrated a strong 
transatlantic leaning, including when he co-signed 
a letter in Science magazine with the head of the 
National Institutes of Health on joint funding for 
U.S.-EU health research projects.  Whether he 
wants or is able to bring a bit more sanity to the 
EU's chemicals regulation Q REACH Q remains to be 
seen. 
 
 
BRUSSELS 00001616  007.8 OF 010 
 
 
Health and Consumer Affairs: 
 
¶25. (U) Science at times has also been lacking in 
the EU's approach to consumer safety, in 
particular with respect to food safety, where 
political perceptions of public desires have often 
held sway despite scientific evidence. 
Nonetheless, key U.S. regulatory agencies like the 
Animal and Plant Health Inspection Service, the 
Food Safety Inspection Service, FDA, the Consumer 
Product Safety Commission and the Federal Trade 
Commission have established good working relations 
with their EU counterparts in this and other areas 
of regulation, including pharmaceuticals, medical 
devices and consumer safety and information.  This 
despite the fact that their main EU counterpart, 
DG SANCO, has had to report to two different 
Commissioners since responsibilities for it were 
divided between two Commissioners, now Vassiliou 
and Kuneva, with enlargement in 2004. 
 
¶26. (SBU) We expect these transatlantic regulatory 
relationships to continue to grow under the new 
Commissioner, John Dalli of Malta.  The 
reunification of health and consumer safety under 
one Commissioner has been generally welcomed in EU 
consumer circles, and Dalli, although unknown to r
Europe, may be a good chief.  Certainly this is 
the view of the current President of Amcham EU, 
Malta's Ambassador to the EU before he joined 
General Electric and now Microsoft, who knows 
Dalli well.  Malta has, however, not been an ally 
on new food technologies in the past Q notably 
generally opposing biotech approvals; a similar 
political dynamic in her Cypriot constituency led 
the previous SANCO Commissioner to be less than 
courageous in supporting science over perceived 
public opinion.  Dalli, 61, now Malta's Social 
Policy Minister with responsibility for health has 
held numerous other cabinet positions in the 
Maltese government, including as Minister of 
Finance, Foreign Relations, and Economic Affairs. 
He too may face tough questioning in the EP for 
old allegations of misconduct on government 
contracts; his ties to Libya may also present 
concern. 
 
 
Sectoral Policies 
----------------- 
 
Agriculture: 
 
¶27. (U) The agricultural sector consumes nearly 
half of the EU budget, including an expenditure on 
subsidies that has long been a thorn in the side 
of U.S.-EU trade relations.  This proportion has 
been sliding as the EP Q long without a voice over 
this part of EU spending Q whittled it away in 
favor of internal policies.  The Lisbon Treaty, 
however, finally gives the EP co-decision over 
agricultural spending with the member states, 
adding a major new political twist with which the 
new Agricultural Commissioner Q and we -- will 
have to contend. 
 
¶28. (SBU) Of the Commissioners available to him, 
Barroso was right in telling the press that the 
new Romanian Commissioner, Dacian Ciolos, is the 
best qualified for the agricultural portfolio. 
Before becoming Romania's Agricultural Minister in 
late 2007, Ciolos, a 40 year-old horticultural 
engineer, was Romania's representative on the EU's 
sub-Ministerial Special Committee on Agriculture 
and the Ministry's Under Secretary for EU affairs. 
He has also worked in DG AGRI, and spent about 8 
years in the 1990s working on agriculture and 
rural development in France.  This French 
connection disturbs some, especially from the UK, 
but Ciolos is also seen as someone extremely 
interested in modernizing and bringing science to 
the sector. 
 
Industry and Entrepreneurship: 
 
 
BRUSSELS 00001616  008.10 OF 010 
 
 
¶29. (U) Now headed by German Guenther Verheugen, 
the Enterprise and Industry portfolio in the 
Commission has been on the decline; Barroso 
accelerated this considerably in his Friday 
announcement by saying the pharmaceutical, medical 
devices and cosmetics units, as well as the 
European Medicines Agency, would shift to DG 
SANCO.  DG ENT was dealt additional blows by 
losing its hold on the remainder of the Better 
Regulation dossier, which has shifted to the 
 Secretary General's office,as well as Verheugen's 
lead over the Transatlantic Economic Council. 
This in many ways leaves a rump directorate that 
will be focused primarily on dealing with the woes 
of the auto sector, as well as "entrepreneurship". 
The weaker Commissioner will still have to play a 
key role in trying to support the interests of 
industry in ensuring EU regulation is not overly 
onerous, especially on smaller businesses. 
 
¶30. (SBU) Italian Antonio Tajani, now Commissioner 
for Transport, is at best moving laterally; some 
feel the shift to Industry may be a demotion.  The 
56 year-old Tajani, after 15 years in the European 
Parliament, is not seen as having had much impact 
in the Commission, although to be fair he has been 
there only seven months (he replaced Franco 
Frattini when the latter became Italy's Foreign 
Minister).  Tajani, a career soldier journalist 
and politician is close to Berlusconi and was at 
the creation of the Forza Italia.  DG ENT staff 
are not convinced he can bring a new dynamism to 
the Directorate. 
 
Transport: 
 
¶31. (U) The Transport Commissioner position Tajani 
leaves is immediately important to us as the U.S. 
and EU are negotiating the "second stage" of our 
Open Skies agreement the first half of 2010. 
Transport will be made into its own Directorate- 
General, with the half that reported to Tajani 
splitting from energy.  The new Directorate 
General will also oversee the European Aviation 
Safety Agency, the European Railway Agency, the 
European Maritime Safety Agency and the Trans- 
European Transport Network Executive; it will lose 
control over state aid decisions in the sector, 
which will go to DG COMP.  The road and rail parts 
of Transport, although not now high in our 
bilateral relations, may become more so with 
increased U.S. interest in Europe's high speed 
rail (Transport Secretary LaHood explored this 
when he visited Europe in May and November, and 
Federal Railroad Administrator Szabo was here two 
weeks ago) and EU interest in our experience with 
intelligent traffic management systems. 
 
¶32. (SBU) The new Transport Commissioner, Estonian 
Siim Kallas, 61, does not bring much specific 
background to the post, but the former President, 
Foreign and Finance Minister of the small Baltic 
republic has built a reputation among ranking 
Commission officials as a shrewd operator, 
including in his oversight of the rotation of 
senior Commission posts. 
 
Maritime Affairs and Fisheries: 
 
¶33. (U) Responsible for the Integrated Maritime 
Policy and the Common Fisheries Policy, this 
Commissioner is charged with balancing the 
economic potential of the oceans and seas with 
protecting the marine environment and meeting the 
needs of coastal communities.  It works closely 
with the European Environmental Agency.  Guiding 
the Integrated Maritime Policy in the fields of 
spatial planning, comprehensive marine research 
and data collection, maritime surveillance, along 
with economic and political concerns of the 
Baltic, Mediterranean, and Arctic regions requires 
a deft touch with other EU Services and agencies. 
Managing the competing economic and environmental 
demands of European fisheries, and the highly 
charged political interaction with Member States, 
 
BRUSSELS 00001616  009.2 OF 010 
 
 
is an unenviable task. 
 
¶34. (SBU) Putting a Greek in charge of anything 
having to do with maritime affairs, as Barroso has 
done with his nomination of Maria Damanaki, will 
certainly bring an interesting dynamic to the 
portfolio, and indeed to the College of 
Commissioners.  The issues that affect the 
shipping industry are critical to Athens, and 
Damanaki is apt to focus on commercial shipping, 
as current Maltese Commissioner Borg does.  A 57- 
year old chemical engineer who became active in 
the fight against the Greek Junta, her personality 
may mesh well with Siim Kallas', helping reduce 
the struggles between MARE and Transport.  In 
fisheries, she is likely to support France and 
Spain with a continued focus on the economic 
problems of the EU fishing fleets rather than on 
conservation efforts, increasing US concerns about 
managing endangered species and magnifying our 
difference on quotas for bluefin tuna and other 
commercially valuable catches. 
 
Energy: 
 
¶35. (U) Energy and energy security have loomed 
large on the EU policy radar since the January 1, 
2006 cut-off in Russian gas deliveries to Ukraine. 
EU powers in this area, however, have been 
limited: while it promoted internal energy market 
liberalization through Single Market mechanisms, 
the EU only gets the right to act on external 
energy security issues with the Lisbon Treaty. 
Barroso clearly wants a greater focus on this 
issue, and used the announcement of Commissioner 
portfolios to confirm that DG Transport and Energy 
would be split into two, with energy under the new 
German Commissioner, Gunther Oettinger. 
 
¶36. (SBU) Oettinger, now Minister President for 
the state of Baden-Wurttemberg, was named 
Germany's Commission candidate in October despite 
any European bona fides.  Many, including in the 
German community in Brussels, were disappointed in 
the nomination, saying Merkel wanted only to get a 
poorly performing Oettinger out of a critical 
electoral state.  This may be one reason Oettinger 
was not given a more significant role.  This, 
coupled with Germany's dependence on Russian gas, 
its opposition to a common energy market, and 
Oettinger's statements that the Commission "not 
exceed it competencies," raises questions about 
how hard he will push to diversify Europe's gas 
supply.  Oettinger has a background in law and 
economics.  He entered the Baden-Wurttemberg 
assembly in 1984 and became minister-president in 
2004.  As minister-president, he increased Baden- 
Wurttemberg's 2020 renewable energy targets to 20% 
- consistent with EU legislation, but observers 
note Baden-Wurttemberg's wind production is well 
below the EU's average.  Baden-Wurttemberg is also 
home to auto manufacturers Porsche and Daimler. 
 
Information Society Q now "Digital Agenda": 
 
¶37. (SBU) The Digital Agenda/Information Society 
portfolio has grown steadily in importance, as the 
sector has expanded its weight in the EU economy. 
The new Commissioner will oversee finalizing a 10- 
year EU "Digital Agenda" to replace the i2010 
program, in outlining the specific policy actions 
needed to position the EU ICT market for the next 
decade.  The Digital Agenda will focus on 
strengthening the EU ICT single market and using 
ICT to boost economic growth and recovery.  A 
major task will be implementation of the newly 
passed EU telecoms regulatory reform Q including 
launching a new EU regulatory agency, expanding 
the Commission's competition powers over the 
sector and improving spectrum management.  The 
Digital Agenda will also cover improving broadband 
access and quality, digital content, and continued 
responsiveness to consumers. 
 
¶38. (SBU) With a growing portfolio, Competition 
 
BRUSSELS 00001616  010.4 OF 010 
 
 
Commissioner Neelie Kroes' shift to Digital 
Economy can be seen as lateral, though in practice 
her influence will likely wane.  Kroes is a strong 
transatlanticist whose extensive business 
credentials led to surprise when she aggressively 
pursued competition cases against major U.S. ICT 
firms, EU energy firms, and a number of cartels 
during the first Barroso term.  Kroes' extensive 
familiarity with the U.S. ICT sector should be a 
plus, especially given her recent make-up with 
Microsoft.  She has the potential to make major 
headway toward an integrated EU ICT market and 
will closely monitor telecoms incumbents for 
market abuses and to protect consumers' rights. 
Kroes likely will continue the tradition of close 
consultation with the U.S. she developed as 
Competition Commissioner, though with new U.S. 
agencies. 
 
Comment 
------- 
 
¶39. (SBU) Barroso had little choice over whom the 
member states would appoint to serve with him in 
the College of Commissioners, and he was pushed by 
all 27 capitals to give one portfolio or another 
(six, for instance, reportedly vied for Energy). 
 
¶40. (SBU) Given these constraints, Barroso has 
done a good job.  Some capitals will be concerned 
(Nicosia, potentially Rome), and some portfolios 
will probably cause problems for us, but in the 
main the assignments look generally positive for 
U.S. interests and transatlantic relations. 
 
¶41. (SBU) The Commissioners, however, will all 
grow into their portfolios in the coming weeks, 
not least as they go through extensive hearings 
through January before a stronger, and more 
activist, European Parliament intent on 
demonstrating its populist credentials.  We do not 
discount the likelihood that some of the 
candidates noted above may have to withdraw before 
the January 26 vote on the College, as happened in 
2004.  In this event, however, the portfolios are 
unlikely to change. 
 
¶42. (SBU) Given this need for confirmation, it may 
be premature to reach out now to formally 
congratulate the candidates, especially those who 
will be new to the Commission.  That said, early 
contact after confirmation, and early meetings 
next year, can only help smooth transatlantic 
cooperation across the swathe of U.S.-EU economic 
policy issues. 
 
MURRAY

We would love to be informed of other interesting finds in the above cable. █

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The Cost of Using Microsoft

Posted in Site News at 8:34 am by Dr. Roy Schestowitz

Here comes the SAN

Summary: Businesses and individuals left without access to their data as yet another major downtime hits Microsoft’s so-called ‘cloud’

IT IS bad enough to rely on Fog Computing but even worse to rely on Microsoft for it. It’s not just that Microsoft is an abusive monopolist; its products are inferior too and it shows.

So, several people let us know that Microsoft’s office 360 (5 days of downtime) is “down yet again”.

Homer (Slated.org) writes: “At this rate they’ll have to rename it “Office 3.65″.” He quotes an article which says that “Microsoft scrambles to restore Office 365 services

“More questions will be being asked today over the reliability of Microsoft’s cloud service Office 365 after the vendor’s hosted software suffered an outage last night. [...] but this is the second time in as many months that there have been problems in the four month old hosted application suite.” (from microscope.co.uk)

Another link was actually sent to us by a reader, linking to The Inquirer which states:

Microsoft’s Hotmail and Windows Live knocked offline

SOFTWARE HOUSE Microsoft watched as its online services including Hotmail went down for a few hours last night.

The firm’s services, including Hotmail email, Skydrive and Office365 were knocked offline and so far the reasons behind the outages are unknown.

However, they are coming back online. Earlier today a tweet from the Office365 Twitter account said that all users there should be satisfied. “Thanks for your patience. We believe service is restored for all Office365 users,” it said.

It is funny that they rely on Twitter. Had they relied on a Microsoft service, perhaps that too would be down. But Twitter uses GNU/Linux. Maybe Microsoft should get a clue.

The downtime was serious enough for Microsoft apologists to speak about (cover rather than cover up) and Mr. Pogson, a critic of Microsoft, says that Microsoft cannot keep a DNS server running. To quote: “A DNS service is a simple server/cluster with a configuration. It’s easy. It’s a well-defined protocol. Yet M$’s cloud came crashing down because of a failure of DNS for hours. Was there no one awake to reboot the servers?”

It is being suggested that Hotmail too was down. Too much interdependence? No redundancy? Typical Microsoft.

“Microsoft’s online services briefly go dark,” explains Steven J. Vaughan-Nichols in his post which explains:

This has not been a good month for the Internet’s core address system: the Domain Name System (DNS). First, there was a man-in-the-middle attack on numerous Web site users caused by a Turkish cracker. Now, according to Microsoft, many of its online services were disabled by a DNS failure.

At first, some people thought this collapse of Office 365, Hotmail, SkyDrive, and other Windows Live programs might be due to problems with Windows Azure cloud or other Windows server problems. It quickly became apparent though that it was a DNS problem.

Microsoft’s senior vice president for Windows Live, Chris Jones, has been keeping users up to date on how the company is handling the problem on the Inside Windows Live blog. By 12:45 AM Eastern time, Jones reported that “We believe we have restored service for all customers at this time. We will continue our investigation into the root cause of these issues and post an update following our investigation. Again we appreciate your patience and apologize for the inconvenience.”

Well, until next time. Microsoft has a very poor track record in that regard. █

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Cablegate Makes Considerable Difference in IT

Posted in America, Microsoft, Office Suites, Open XML, OpenDocument at 8:12 am by Dr. Roy Schestowitz

Photo by Espen Moe

Summary: The impact of leaked diplomatic cables on current affairs and perceptions people have about companies, government, and elected officials

OVER the past day or two we have been receiving a record number of links to this site, mostly pointing to Cablegate posts. People from all over the world share with their friends what they previously suspected but could not prove.

One person from Brazil is pulling skeletons out of Microsoft’s closet and embarrassing the cowardly, supine government at the same time. Following some blog posts about American diplomats lobbying for OOXML (including our own post), we are notified about this very detailed post which provides further background to the leak from someone who was nearby:

Let me make clear here that I don’t believe that this meeting between Microsoft and the major representative from the American Government in Brazil has been a personal initiative of Mr. Michel Levy, but for me it was an corporative initiative. Even being a Microsoft employee, Mr. Michel Levy is a Brazilian, and I prefer not to believe that he has, on its own initiative, decided to start an initiative to put the American Government against the Brazilian Government, thus violating our sovereignty and our national technical merit.

The first question that I leave here is on how many other countries that voted NO to OpenXML the same kind of initiative also happened, and how much of these countries “have accepted” an eventual intervention by the U.S. government.

Yes, the intervention may have occurred, because if you notice the general line of argumentation used here in Brazil, the national technical decision is presented as being an initiative against the Intellectual Property Rights (IPR), and one of the things that cause retaliation in free trade agreements with the United States are eventual IPR violations. I have my own collection of rumors from the times of OpenXML, where possible sanctions motivated by IPR violations were brought to the negotiation table to get the governmental votes in some countries (if your country has changed the vote after the voting in September 2007, please investigate and you will probably find a ‘key’ governmental role on that vote changing). Maybe one day, WikiLeaks could help us to investigate that too!

[...]

Finally, they try to insinuate that the ODF is an anti-American standard. I confess that I would like to know what IBM, Oracle, Google and Red Hat (and other North American companies) think about the that, since they work hard on the past years on its development and worldwide adoption. Actually I prefer that these companies explain directly to the American Government if the ODF is anti-American, and I still hope they ask clarification from the American Government about Microsoft’s similar initiatives in other countries during the 2007 and 2008 years.

For those who did not follow the whole story, the ODF was adopted in Brazil, OpenXML rejected here and just didn’t had a major role on the international scene, because we were silenced on the last day of the BRM, just when we would submit a proposal that could change the end of this history. I’ve already told this story here.

Special thanks to WikiLeaks, for helping us get the skeletons out of the closet. For those who want to understand how Microsoft deals and negotiates with governments that have pro-FLSOO policies, it’s worth reading this other cable here.

Well, now there is proof too.

Several days ago we found out what American government officials were saying about Neelie Kroes. We published this yesterday and Jan Wildeboer notes that there is plenty more where that came from. Sooner or later we shall get around to it. This promises to change the way Microsoft and its lobbying practices are widely perceived. █

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