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EC hits Microsoft with major $1.4b fine

updated 08:50 am EST, Wed February 27, 2008

EC Fines MS 1.4B

Microsoft will have to pay a fine equal to $1.35 billion for allegedly violating already existing antitrust sanctions, the European Commission said today. The demand comes after a follow-up investigation by the regulatory body which reported that Microsoft had held back on code necessary to let rival firms develop more explicitly compatible software, particularly for workgroup server programs. The amount far exceeds the original $330 million fine imposed in 2004 for the original violation and is characterized as punishment for Microsoft's reluctance to obey the ruling -- a resistance which is unprecedented for the EC, according to Competition Commissioner Neelie Kroes.

"Microsoft was the first company in 50 years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision," Kroes added.

The Windows developer is particularly charged with deliberately obstructing ease of access by providing information only to companies willing to pay steep royalty rates; companies seeking interoperability code needed to pay out almost 3 percent of their sales revenues to Microsoft for the privilege, while patent licenses cost almost 4 percent. This negated most of the benefit of implementing Microsoft's technology and saw the company agree to lower its rates only after sustained pressure from European officials in 2007, which at first dropped the rates only for Europe but extended to other regions in October. The new fine is based on Microsoft's practices until that last date, the EC said, with the original penalty having cost Microsoft $795 million in 2004 and non-compliance between 2006 and 2007 costing an extra $442 million in today's dollars.

Microsoft is believed to have announced its decision to publish free Office and Windows code documentation to avoid further European litigation and earn favor from the Commission. While unsuccessful in softening the results, the act leaves the new fine as a penalty for "past issues" rather than a reflection of current behavior, according to an official Microsoft response.

The company may face additional fines based on additional investigations launched at the same time as the EC's latest efforts, which suggest Microsoft has used similar stalling tactics for its Excel and Word software and that the firm may have developed its Office Open XML format in bad faith, hoping to quash the opposing Open Document Format championed by Sun and other direct challengers.



By Electronista Staff
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  1. climacs

    Dedicated MacNNer

    Joined: Sep 2001

    0

    allegedly???

    "Microsoft will have to pay a fine equal to $1.35 billion for allegedly violating already existing antitrust sanctions"

    holy c***, Batman, can you spot the poor writing errors?

    1) well, if they were fined, then I would suppose that they actually did violate anti-trust laws.

    2) 'sanctions' cannot be violated. Sanctions are punishments for violating the law.

    3) 'already existing' - what does this mean? Of course they were already existing.

    here's a much better version of the graf:

    "Microsoft will have to pay a fine equal to $1.35 billion for violating anti-trust laws."

  1. bhuot

    Fresh-Faced Recruit

    Joined: Nov 2003

    0

    not effective

    This is not enough to make a difference. It is equivalent to fining people having overdue library books a few cents a day and equally ineffective. The only way for Microsoft to think twice about violating laws is to ban all Microsoft products from the EU permanently.

  1. ViktorCode

    Fresh-Faced Recruit

    Joined: Jan 2006

    0

    taste of money

    Once Euro Commission has bitten Microsoft's money pie they won't just let it go. At least money-grabbing implies some logic on Commission's part. Were we really supposed to believe that MS did it to itself by... bundling media player with Windows and leaving consumer with no choice? That was the original complaint, along with incoherent babbling that MS couldn't provide European companies with good enough documentation to allow them making compatible products (US companies managed it at the first attempt).

    The whole story is outrageous display of Euro Commission incompetence. Yes, they can fine MS and they are doing it, however what it has to do with the consumers' benefits? Where are superior software products from the competition who filed complaints in the first place?

    Now the next "evil MS" tale looms ahead: ODF versus OOXML. This time we are supposed to believe that the only reason people still buying MS Office instead of using free OpenOffice is the closed file formats "developed in a bad faith in order to quash the opposition"... Yeah, right.

  1. nat

    Junior Member

    Joined: Mar 2002

    0

    so very wrong

    "Where are superior software products from the competition who filed complaints in the first place?" During the mid to late 90's and early 00's venture capitalists had all but abandoned the tech industry. Why? Because why back a product when MS will come along, copy it, tie it to Windows and give it away for free, thus destroying any possible market share for them. Thus, no superior products.

    Since you seem to think this is so outrageous why don't you tell us all of one product MS has brought to the table and won the market by competing fairly. Seriously, one will do nicely.

    DOS? No. Word? No. Excel? No. Media Player? No. (their first Media Player was Quicktime, MS brand on it of course but the same code, they lost the law suit and didn't have another one for awhile...).

    The list goes on right on up to xbox.

    We'll wait here.

  1. ViktorCode

    Fresh-Faced Recruit

    Joined: Jan 2006

    0

    2 nat

    Perhaps you think Microsoft is somehow responsible for venture capitalists abandoning IT in said period of time (and internet bubble has nothing to do with it?), but you make it sounds like it is relevant to my question, but it isn't. The question stands: Where are the products the companies which filed the complaints are supposed to be making? I might add another question to this one: why Euro Commission says it fined MS now for not providing access to the source code to developers, and yet the same Euro Commission turned down MS offer to provide source instead of documentation earlier? I can continue the list of obvious blunders the pinnacle of which will be Windows N. Did it bring choice to consumers as Commission implied?

    If you think that MS became monopoly in the first place not by winning customers from competition, but by unfair business practice, please provide us with facts, not with the names of products with word "No" stuck next to them. In any way, even picturing MS as the most evil corporation in the world doesn't appeal to incompetence of Euro Commission which is supposed to work for consumers, not for bank accounts. If consumers have benefited from EC vs. MS case I want to see the proof. As I see the situation now, Euro Commission acts as a tool in hands of big US companies, using every power in their disposal to gain advantage above competitors. Does it bring good to EU consumers? I wish...

  1. Foe Hammer

    Fresh-Faced Recruit

    Joined: Feb 2005

    0

    Read MS Source Code?

    Instead of documentation? Are you kidding? It'd be easier to read and understand the text of Beowulf. After it had been translated into Latin. By a ten year old. In Japan. Working from the Spanish version. Adapted by your grandmother. From the original Klingon text.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Re: so very wrong

    Since you seem to think this is so outrageous why don't you tell us all of one product MS has brought to the table and won the market by competing fairly. Seriously, one will do nicely.

    DOS? No. Word? No. Excel? No. Media Player? No. (their first Media Player was Quicktime, MS brand on it of course but the same code, they lost the law suit and didn't have another one for awhile...).


    Please explain how Word did not win the market fairly? Word won because the idiots running WordPerfect were just that, idiots. They stuck with a DOS version for waaaaaay too long, and when they finally came out with a windows version it sucked. Word won by default, not due to unfair practices.

    And since when is Media Player the king of the hill and killer of all other video players? Last I looked there were a slew of options (including Quicktime) for Windows. Just because people are lazy to find an alternative doesn't mean they won out.

    Oh, and that first Media Player wasn't Quicktime with a Media Player title (which just sounds like they skinned the player). It had some quicktime code in there. But that's completely different (I didn't say better, just different).

    Note, also, Apple doesn't offer any alternatives on their computers, yet no one seems to complain...

    Oh, since I forgot it, MS DOS ruled the market since the early 80s. DR-DOS didn't become a player (and get knocked around by MS) until DOS was near EOL.

  1. MacnnChester

    Fresh-Faced Recruit

    Joined: Jun 2007

    0

    2 viktorcode

    The fact that MS has drug its feet and made it own software useless for other companies is EXACTLY what the EU is saying. MS made Windows N bad, not the EU.

    The last bastion of monopolies is incompetence and that is what we are seeing.

    "If you think that MS became monopoly in the first place not by winning customers from competition, but by unfair business practice, please provide us with facts, ...." Did you ever read the evidence from the US DOJ hearings in which MS was found guilty of exactly this? Catch a clue.

    There is finally a government that has the grit to fine companies for breaking the law and you denounce it. MS admits its mistakes and you ignore them. It doesn't matter if other companies took advantage of the situation, MS still broke the rules. I bet now a few can see that MS is going to be watched carefully and maybe they can afford to get the vc to compete on an even playing field. THAT is merely the point of anti-monopoly regulations, to create a level playing field. If MS still wins, fine, but why do you want them to avoid their responsibilities when they do break the rules?

  1. nat

    Junior Member

    Joined: Mar 2002

    0

    ah, lessons

    you can't bother to do some research?

    Wordperfect sucked because, surprise, the API's given them were less than, uh, stellar. Tough to make a good wine with rotten grapes. They complained bitterly about this to no avail.

    DR-DOS didn't become a player because of the restrictions that MS put on hardware manufacturers, then of course that wonderful Windows 3.1 where if you had DR DOS installed you got fake warnings about having to install MS DOS...

    Uh, with some quicktime code? Uh, ok. Regarding king of the hill, is that a serious question? It has nothing to do with lazy people, it's bundled, the MS motif... over and over...

    And what does this have to do with Apple? We're talking about antitrust here. What's your point?

    "If you think that MS became monopoly in the first place not by winning customers from competition, but by unfair business practice, please provide us with facts"

    Geesh, name one already, one will do nicely.

  1. MacnnChester

    Fresh-Faced Recruit

    Joined: Jun 2007

    0

    2 testudo

    If Word won by merely being a better product, then why to most of the people who used both Word and WP keep saying that WP was better by a margin of roughly 5 to 1? Sure WP was managed by idiots, but it was a superior product for a time and it is hard to imagine that MS would not give its own app and advantage on its own platform ... that is just delusional.

    Netscape was better than IE for years. WP was better than Word for years. QT vs. Media Player, the same. Excel has been an exception and is a good product. We don't need to go thru the litany of products that everyone except you has already agreed upon. MS uses its monopoly and cash reserves to out compete rivals in legal and illegal ways. It is the responsibility of governments to prosecute MS for the illegal ways. Kind of simple.

    Oh and in case you think I am just anti-MS, I hope that the US congress passes a bill that restricts the ability of companies like Apple and AT&T to lock things up 'a la MS. It may hurt Apple in the short term, but I'm sure they would like to get out from under their 5 year commitment to AT&T as much as their customers do.

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