EU Fines Microsoft $1.3 Billion

[Dargos]

EU fines Microsoft record $1.3 billion
World's largest software supplier fined for charging rivals too much to make compatible computer programs.
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Microsoft was fined a record $1.3 billion by the European Union for anti-trust violations related to software information.

BRUSSELS, Belgium (AP) -- The European Union fined Microsoft Corp. a record $1.3 billion on Wednesday for charging rivals too much for software information.

EU regulators said the company charged "unreasonable prices" until last October to software developers who wanted to make products compatible with the Windows desktop operating system.

Microsoft (MSFT, Fortune 500) immediately said that these fines were about past issues that have been resolved and the company was now working under new principles to make its products more open.

The fine is the largest ever for a single company and the first time the EU has penalized a business for failing to obey an antitrust order.

The penalty far outweighs a a March 2004 decision that fined Microsoft $613 million and ordered it to share communications information with rivals within 120 days, taking an appeal to an EU court that it lost last September.

The EU alleged that Microsoft withheld crucial interoperability information for desktop PC software - where it is the world's leading supplier - to squeeze into a new market and damage rivals that make programs for workgroup servers that help office computers connect to each other and to printers and faxes.

The company delayed complying with the EU order for three years, the EU said, only making changes on Oct. 22 to the patent licenses it charges companies that need data to help them make software that works with Microsoft.

Microsoft had initially set a royalty rate of 3.87% of a licensee's product revenues for patents and demanded that companies looking for communication information - which it said was highly secret - pay 2.98% of their products' revenues.

The EU complained last March that these rates were unfair. Under threat of fines, Microsoft two months later reduced the patent rate to 0.7% and the information license to 0.5% - but only in Europe, leaving the worldwide rates unchanged.

The EU's Court of First Instance ruling that upheld regulators' views changed the company's mind again in October when it offered a new license for interoperability information for a flat fee of $14,000 and an optional worldwide patent license for a reduced royalty of 0.4%

Link to story

[wautd]

It sounds much because the dollar is so low these days. It's "only" 900 million euro's really

[Molyneux]

It sounds much because the dollar is so low these days. It's "only" 900 million euro's really

Sure...but a hundred million euros here, a hundred million euros there, and soon you're talking about real money!

[Xisiqomelir]

As if they're going to pay. This is not a company that cares about the law.

[Darth Tanner]

microsoft linky

Microsofts revenue for this financial year is going to be over $56.8 billion with a £22 billion operating profit.

I don't think they care too much.

Did Microsoft actually pay the last fine?

It sounds much because the dollar is so low these days. It's "only" 900 million euro's really

Its 'only' 700 million pounds as well. Pocket money.

[Gustav32Vasa]

Why does EU charge them in dollars?

[Kuja]

Why does EU charge them in dollars?

Maybe because they're an American-based company?

[Gustav32Vasa]

Why does EU charge them in dollars?

Maybe because they're an American-based company?

But the court are in EU.

[Jon]

I suppose the money will go someway towards lining the pockets of corrupt MEPs and keeping French Farmers from farming their fields for a few more years.

[Zac Naloen]

Why does EU charge them in dollars?

Maybe because they're an American-based company?

But the court are in EU.

I suspect most european reports will show the amount in Euro's.

Cnn is just US centric.

[Xisiqomelir]

EU PR:

Antitrust: Commission imposes € 899 million penalty on Microsoft for non-compliance with March 2004 Decision

The European Commission has imposed a penalty payment of € 899 million on Microsoft for non-compliance with its obligations under the Commission’s March 2004 Decision (see IP/04/382) prior to 22 October 2007. Today’s Decision, adopted under Article 24(2) of Regulation 1/2003, finds that, prior to 22 October 2007, Microsoft had charged unreasonable prices for access to interface documentation for work group servers. The 2004 Decision, which was upheld by the Court of First Instance in September 2007 (see CJE/07/63 and MEMO/07/359), found that Microsoft had abused its dominant position under Article 82 of the EC Treaty, and required Microsoft to disclose interface documentation which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers at a reasonable price.

“Microsoft was the first company in fifty years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision", said European Competition Commissioner Neelie Kroes. "I hope that today's Decision closes a dark chapter in Microsoft's record of non-compliance with the Commission’s March 2004 Decision and that the principles confirmed by the Court of First Instance ruling of September 2007 will govern Microsoft's future conduct".

The Commission’s Decision of March 2004 requires Microsoft to disclose complete and accurate interoperability information to developers of work group server operating systems on reasonable terms.

Initially, Microsoft had demanded a royalty rate of 3.87% of a licensee's product revenues for a patent licence (the "patent licence") and of 2.98% for a licence giving access to the secret interoperability information (the "information licence"). In a statement of objections of 1 March 2007, the Commission set out its concerns regarding Microsoft's unreasonable pricing (IP/07/269). On 21 May 2007, Microsoft reduced its royalty rates to 0.7% for a patent licence and 0.5% for an information licence, as regards sales within the EEA, while leaving the worldwide rates unchanged.

Only as from 22 October 2007 did Microsoft provide a licence giving access to the interoperability information for a flat fee of €10 000 and an optional worldwide patent licence for a reduced royalty of 0.4 % of licensees’ product revenues (see IP/07/1567).

Today’s Decision concludes that the royalties that Microsoft charged for the information licence – i.e. access to the interoperability information - prior to 22 October 2007 were unreasonable. Microsoft therefore failed to comply with the March 2004 Decision for three years, thereby continuing the behaviour confirmed as illegal by the Court of First Instance. Today's Decision concerns a period of non-compliance not covered by the penalty payment decision of 12 July 2006 (see IP/06/979) starting on 21 June 2006 and ending on 21 October 2007. The Decision does not cover the royalties for a distinct patent licence.

The Commission has based its conclusions as to the unreasonableness of Microsoft's royalties prior to 22 October 2007 on the lack of innovation in a very large proportion of the unpatented interoperability information and a comparison with the pricing of similar interoperability technology.
For further information and background on this case see MEMO/08/125 and the Europa website:

http://ec.europa.eu/comm/competition/an ... index.html

[Crown]

Why does EU charge them in dollars?

It charged them in Euros, it's only the American press reporting the $ equivalent. The same article on the BBC gives the fine in Euros first and then in $ and Pounds in parenthesis.

[Ryan Thunder]

Maybe this is a dumb question, but I'm no expert and I don't mind admitting it; what laws are they violating?

I mean, here's how I understand it. Feel free to rip it apart piecemeal if necessary.

Microsoft sells an OS bundled with a bunch of their software. Apple sells their OS bundled with a bunch of their software. Linux doesn't seem to sell anything, but we'll count them anyways because they still take the market away from the other folks.

If Microsoft's OS and/or software bundle is intentionally shitty, why don't people buy/download something else?

[PainRack]

Maybe this is a dumb question, but I'm no expert and I don't mind admitting it; what laws are they violating?

I mean, here's how I understand it. Feel free to rip it apart piecemeal if necessary.

Microsoft sells an OS bundled with a bunch of their software. Apple sells their OS bundled with a bunch of their software. Linux doesn't seem to sell anything, but we'll count them anyways because they still take the market away from the other folks.

If Microsoft's OS and/or software bundle is intentionally shitty, why don't people buy/download something else?

They don't release information to other software developers, making it difficult for them to make software compatible with MS products, thus restricting consumers to MS developers.
There's also previous claims a bout how IE or WMP is required for the stability of Windows and can't be removed.

[Resinence]

I'm not sure if they are even capable of publishing full documentation of all of the window's API's, win32 is a fucking tangled mess, and win16 is so ancient no one knows what the christ most of it does anymore. WinNT is already fairly well documented.

[Netko]

Maybe this is a dumb question, but I'm no expert and I don't mind admitting it; what laws are they violating?

I mean, here's how I understand it. Feel free to rip it apart piecemeal if necessary.

Microsoft sells an OS bundled with a bunch of their software. Apple sells their OS bundled with a bunch of their software. Linux doesn't seem to sell anything, but we'll count them anyways because they still take the market away from the other folks.

If Microsoft's OS and/or software bundle is intentionally shitty, why don't people buy/download something else?

Monopoly. When you have it, its a whole new game precisely so that you don't squash all the other players with bundling (IE vs Netscape anyone?) and other unfair business practices that leverage your monopoly.

I'm not sure if they are even capable of publishing full documentation of all of the window's API's, win32 is a fucking tangled mess, and win16 is so ancient no one knows what the christ most of it does anymore. WinNT is already fairly well documented.

That is a problem, true - you can check Ars for the coverage about a year back - they really had problems getting the documentation in order. Still, that isn't exactly EU's problem, now is it?

[Fingolfin_Noldor]

So ... will the EU go after every fry that indulges in bundling? Otherwise, going after the big obvious targets smacks of something else.

[bilateralrope]

So ... will the EU go after every fry that indulges in bundling? Otherwise, going after the big obvious targets smacks of something else.

1 - When a company is a monopoly, it faces greater restrictions on what it is allowed to do.

2 - This case wasn't about bundling. To quote the part of the article that says what this case was about:

The EU alleged that Microsoft withheld crucial interoperability information for desktop PC software - where it is the world's leading supplier - to squeeze into a new market and damage rivals that make programs for workgroup servers that help office computers connect to each other and to printers and faxes.

The company delayed complying with the EU order for three years, the EU said, only making changes on Oct. 22 to the patent licenses it charges companies that need data to help them make software that works with Microsoft.

[MKSheppard]

Watch microsoft ignore them

[Fingolfin_Noldor]

1 - When a company is a monopoly, it faces greater restrictions on what it is allowed to do.

2 - This case wasn't about bundling. To quote the part of the article that says what this case was about:

Monopolies begin from somewhere. Just attacking those who assumed the title of monopoly while letting the monopolistic companies get away with it is simply ignoring the fundamental problem.

[Big Orange]

I suppose the money will go someway towards lining the pockets of corrupt MEPs and keeping French Farmers from farming their fields for a few more years.

I'm no fan of the EU, that may be the case, but at the same time I wonder why the US Government never dismantled much of the Microsoft Corporation when it suddenly turned into this huge, uncaring juggernaut in the early to mid 1990s.

[Xisiqomelir]

I suppose the money will go someway towards lining the pockets of corrupt MEPs and keeping French Farmers from farming their fields for a few more years.

I'm no fan of the EU, that may be the case, but at the same time I wonder why the US Government never dismantled much of the Microsoft Corporation when it suddenly turned into this huge, uncaring juggernaut in the early to mid 1990s.

The DoJ had a solid win on its hands, but Janet Reno couldn't finish the job because she was yanked for Ashcroft. The settlement ended up being a joke because Bush's administration wanted solidify its "pro-business" image.

It still rankles till today, to be honest.

[SirNitram]

1 - When a company is a monopoly, it faces greater restrictions on what it is allowed to do.

2 - This case wasn't about bundling. To quote the part of the article that says what this case was about:

Monopolies begin from somewhere. Just attacking those who assumed the title of monopoly while letting the monopolistic companies get away with it is simply ignoring the fundamental problem.

So the EU commercial court should go after the Bush officials who ensured that Microsoft didn't have to break up after they were found to be violating antitrust laws? Or what?

[Fingolfin_Noldor]

[So the EU commercial court should go after the Bush officials who ensured that Microsoft didn't have to break up after they were found to be violating antitrust laws? Or what?

Huh? The EU doesn't have jurisdiction beyond its borders?

[SirNitram]

[So the EU commercial court should go after the Bush officials who ensured that Microsoft didn't have to break up after they were found to be violating antitrust laws? Or what?

Huh? The EU doesn't have jurisdiction beyond its borders?

Yes. That was sarcasm. You said go after those who allowed it to get to this point. That'd be Ashcroft's DoJ under Bush. Or are you simply totally ignorant of the whole sordid affair?