A slap in the wallet: EU imposes record fine for Microsoft’s “unfair benefits”

The European Union hit Microsoft with an 899-million euro (1.34 billion U.S. dollars) fine on Wednesday, alleging that the company has ignored the EU’s long-standing request to provide competitors key software at a fair price.

02/28/2008


The European Union hit Microsoft with an 899-million euro (1.34 billion U.S. dollars) fine on Wednesday, alleging that the company has ignored the EU’s long-standing request to provide competitors key software at a fair price.
The fine is the largest in EU history and the third one levied against Microsoft. So far, Redmond, Wash.-based software giant has been assessed nearly 1.7 billion euros (2.4 billion U.S. dollars) in fines during its long-running dispute with the EU over Microsoft’s method of sharing source code with vendors who want to build applications that are compatible with Microsoft’s market-leading Windows operating system.
“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,” said EU Competition Commissioner Neelie Kroes.
Last September, the EU’s Court of First Instance rejected a Microsoft appeal of rulings imposing fines of 497 million euro and 280.5 million euro. Those fines were levied by the EU’s executive branch in 2004 and 2005, respectively.
A story on Yahoo! News reports that Microsoft has not decided whether to appeal the latest fine. If Microsoft does not appeal, the Yahoo! story states, payment of the fine would end an investigation into Microsoft's behavior that was triggered by a 1998 complaint by Sun Microsystems Inc . It alleged Microsoft was refusing to supply information that servers need to work with its market-dominating Windows operating system.
The EU argues that Microsoft has been able to reap unfair benefits and damage consumers by refusing to give so-called interoperability protocols—instructions needed by servers to work effectively with Windows—to its rivals.
Microsoft had initially demanded royalty payments of 3.87 percent of a licensee’s product revenues for a patent license and 2.98 percent for a license giving access to the secret interoperability information.
The company later reduced its royalty rates to 0.7 percent and 0.5 percent respectively, but only started charging what the EU considers a reasonable flat fee of 10,000 euros on October 22, 2007.
Because of this timeline, the EU claims Microsoft has been fined for failing to comply with its demands for three years.
The EU in the past also objected to Microsoft’s decision to bundle its own media player with the Windows operating system. This January, the EU launched to new probes into complaints that Microsoft was using its dominant position to block rival browsers and offices software developers.





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