EU Commissioner for Competition Neelie Kroes addresses the media at the European Commission headquarters in Brussels, Wednesday, Feb. 27, 2008. The European Union fined Microsoft Corp. a record euro899 million (US$1.3 billion) on Wednesday for charging rivals too much for software information. (AP Photo/Yves Logghe)

Record EU Fine for Microsoft

AOIFE WHITE | February 27, 2008 03:00 PM EST | AP

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BRUSSELS, Belgium — The European Union's longest-running fight with Microsoft Corp. neared an end Wednesday as regulators imposed a record $1.3 billion fine on the world's largest software company for failing to fully comply with a 2004 antitrust order.

Microsoft has not decided whether to appeal the penalty, which amounts to a fraction of the $14.07 billion it earned in fiscal 2007. In all, the company has been fined just under $2.4 billion by European antitrust regulators over the years.

Barring an appeal, the fine shuts the door on 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.

Microsoft eventually made the information available to rivals, but the EU said it charged "unreasonable prices" until last October.

EU Competition Commissioner Neelie Kroes said Microsoft now appears to have finally complied with the 2004 EU antitrust order. But she warned that the company was not yet in the clear because the EU last month launched new probes into its Office software and Windows' Internet browser.

The fine was handed down as Microsoft pursues its biggest acquisition to date, but Matt Rosoff, an analyst at the research group Directions on Microsoft, said it would have no effect on the software maker's bid for Web portal operator Yahoo Inc.

"This is a fine for past behavior," said Rosoff, unrelated to Microsoft's offer for Yahoo, which was valued at $44.6 billion in early February.

Kroes also was skeptical over Microsoft's announcement last week that it was further expanding its efforts to make its software work better with rival technologies. A news release, she said, "does not necessarily equal a change in business practice."

"Talk is cheap. Flouting the rules is expensive," she said.

Wednesday's penalty far outweighs the next biggest fine _ $613 million imposed on Microsoft for using its role as the world's leading supplier of desktop software to elbow into new markets for workgroup servers and media players.

Fines _ which can hit as much as 10 percent of company's global yearly revenue _ are paid into the EU budget which pays out farm subsidies and research grants. The European Commission claims antitrust fines ultimately help reduce the financial burden on European taxpayers.

Microsoft earned $14.07 billion on $51.12 billion in worldwide sales during its last fiscal year that ended June 30.

"We could have gone as high as 1.5 billion euros," Kroes said, referring to an amount equal to about $2.2 billion. "The maximum amount is higher than what we did at the end of the day."

Microsoft's actions stifled innovation, hurting millions of people who use computers in offices around the world, she said, calling the fine "a reasonable response to a series of quite unreasonable actions."

The software titan fought hard against the EU's 2004 decision that ordered it to share interoperability information with rivals and sell a version of Windows without media software, taking an appeal to an EU court that it lost last September.

It was fined again in July 2006 _ $357 million _ for failing to obey that order.

The EU alleged that Microsoft withheld crucial interoperability information 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 percent 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 percent 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 percent and the information license to 0.5 percent _ 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 $14,900 and an optional worldwide patent license for a reduced royalty of 0.4 percent.

Even as the EU moves on to new complaints, Microsoft's 1990s business practices remain the subject of oversight in the U.S.

In January, a federal judge extended a consent decree enforcing the 2002 antitrust settlement reached among Microsoft, the U.S. government and 17 states by two years. The settlement barred Microsoft from seeking deals with computer makers to exclude competing software and aimed to keep it from using its operating system monopoly to stifle competition in other products.

___

AP Technology Writer Jessica Mintz in Seattle contributed to this report.


 
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The world would be better without MS in it

    Favorite    Flag as abusive Posted 10:30 AM on 02/28/2008

....and certainly without an extention of the Microsoft monopoly through Yahoo. Europe including Russia and poss. Japan NEED to dev. a marketable alternative to MS's dom. in business. Of course, there is Linux, but, for various reasons, it hasn't achieved a sufficient level of breakthrough. Just as the Japanese reinvented(??) the manufacture of CARS, both functional and durable, SOMEONE needs to deliver a TECHO body blow to MS and dislodge it from its narcissistic stupor.....

    Favorite    Flag as abusive Posted 02:00 PM on 02/28/2008

There are going to be so many appeals that Microsoft won't have to pay the fine for years. Yahoo will be be with Microsoft before they have to pay the fine. http://www.whatisgoingonblog.com

    Favorite    Flag as abusive Posted 08:30 PM on 02/27/2008

Once more with love:

there is only one way an OS like windows--built on already antiquated platform, stolen technology, a slow, bloated, crash prone, security mess--becomes the biggest in the world and Gates the wealthiest man...

If it is possible, and it is, to activate the speaker in your cell phone without your knowledge to listen in on your conversations at any time, imagine what is possible with these computers that we all now own thanks to Dell, Intel and Microsoft.

    Favorite    Flag as abusive Posted 07:35 PM on 02/27/2008

there is only one way an OS like windows--built on already antiquated platform, stolen technology, a slow, bloated, crash prone, security mess--becomes the biggest in the world and Gates the wealthiest man...

If it is possible, and it is, to activate the speaker in your cell phone without your knowledge to listen in on your conversations at any time, imagine what is possible with these computers that we all now own thanks to Dell and Microsoft.

    Favorite    Flag as abusive Posted 06:11 PM on 02/27/2008

Bill Gates owes me $5.

    Favorite    Flag as abusive Posted 01:32 PM on 02/27/2008

Why can't we comment on Buckley's death?

    Favorite    Flag as abusive Posted 01:17 PM on 02/27/2008
- GQB I'm a Fan of GQB permalink

waaahhhhh!!!

    Favorite    Flag as abusive Posted 02:10 PM on 02/27/2008

"Why can't we comment on Buckley's death?"

Fascists are untouchable in America and huffpo is scared shitless...

    Favorite    Flag as abusive Posted 05:53 PM on 02/27/2008

come on Amanda, a fascist? Where does Buckley state gov't should run biz. If anything, you lefties rant about unchecked capitalism. A fascist gov strongarms biz.

    Favorite    Flag as abusive Posted 09:14 PM on 02/27/2008
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o yes bill's microsoft lottery has been givin money promises alklover and the telephone line fixes in official corruption at revenue offices....first i got big emails but then once i tried to cash a small reward they said it was her majesty's revenue office or audit office at london but thats what Abbey Bank said....I couldnt pick the win....

    Favorite    Flag as abusive Posted 12:58 PM on 02/27/2008
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G for Gates ... Explorer's only power broker ...................

    Favorite    Flag as abusive Posted 12:54 PM on 02/27/2008
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.
Microsoft rummages through petty cash drawer .....
.

    Favorite    Flag as abusive Posted 12:54 PM on 02/27/2008

Let's hope that the EU is smart enough to NOT fall for that BS that the U.S. states did - Microsoft gave "vouchers" for price reductions on Microsoft software. BFD. It continues their monopoly power, albeit at a slightly reduced (10%?) price. Free and Open software and TRUE open standards is the only way to assure continued readability and lower costs to consumers.

    Favorite    Flag as abusive Posted 12:32 PM on 02/27/2008
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Don't worry, NoCal, they won't.

    Favorite    Flag as abusive Posted 12:49 PM on 02/27/2008

The Microsoft monopoly and disgraceful business tactics could have been stopped by the US government, but they folded when Bush came to power (not much of surprise).

Consider Mac OS X or Linux when buying your next computer; rising market share for these platforms will in the long run also make for better products from Microsoft.

I use both OS X and Windows XP. Both are good products but I prefer OS X.

    Favorite    Flag as abusive Posted 12:16 PM on 02/27/2008
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Yes ... at this point, it can be said that to continue to use a PC based operating system running a MicroSoft product is to be complicit in MS's crimes ... which are many. If we don't wish to be charged with aiding and abetting a criminal enterprise, we should all switch to Apple products.

Then maybe HuffPo will finally iron out the problems with serving my browser.

8-)>

.

    Favorite    Flag as abusive Posted 12:35 PM on 02/27/2008

Jobs made the incredible mistake of contracting with Gates to write the first windowed Mac OS.

Jobs Paid Gates to write windows.

    Favorite    Flag as abusive Posted 03:14 PM on 02/27/2008

"Consider Mac OS X or Linux when buying your next computer"

You've got to love the naive Mac cultists who truly believe Apple is a benefactor of humanity and not just another evil megacorp...
Psst: any idea who makes the software that runs the iphone?

    Favorite    Flag as abusive Posted 05:56 PM on 02/27/2008

At least the Europeans have the balls to stand up this corporate bully.

    Favorite    Flag as abusive Posted 12:13 PM on 02/27/2008
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Lol. You used European and balls in the same sentence, and it didn't concern soccer.

    Favorite    Flag as abusive Posted 12:27 PM on 02/27/2008

Dearest Rumpleforeskin,

Your ignorance and xenophobia are showing...


    Favorite    Flag as abusive Posted 12:54 PM on 02/27/2008

OK this is going to be very unpopular to say because out here in the Pacific NW, Microsoft is the Dali Lama. Everyone works for Bill Gates or Boeing. But, back in 1999/2000 the US government was building a huge case against Microsoft for monopolistic/anti-trust, you name it kind of stuff, and was going to bring the whole monster to trial--on the heals of a very big loss for Microsoft in Eurpoe too. But then Bushy won and the suit was, guess what?, dropped. I was shocked that Clinton let it get so far and felt he was digging a grave for himself and the Dems by going after the bread, nay, butter of Washington!

    Favorite    Flag as abusive Posted 12:04 PM on 02/27/2008

Dearest fishAreFriends,

Are you saying that the government should ignore an illegal enterprise because it pays a lot of people's salaries? Doesn't it bother you that so many people in the great state of Washington earn their livlihood aiding and abetting criminal actions?

Why should the rest of the nation tolerate such criminal enterprise?

    Favorite    Flag as abusive Posted 01:13 PM on 02/27/2008

What I am saying is this, take a look around at the business community, study the society as a whole, and follow the money. We have a storm coming, pay attention to whom it is going to benefit the most--that man will be your winner.

    Favorite    Flag as abusive Posted 02:08 PM on 02/27/2008

That's how corporatist fascist conservatives think:

"What's good for GM is good for the country"

no matter HOW bad it is for the citizens.

    Favorite    Flag as abusive Posted 03:16 PM on 02/27/2008

Screw the EU.

I think Bill should fire everyone and I mean
E V E R Y O N E.

Cash in his chips and go home.

But it's a publicly trade company so all he can do is cash in his own chips and walk away.

    Favorite    Flag as abusive Posted 11:23 AM on 02/27/2008

The ignorance, stupidity, and overarching selfishness evidenced by your post are truly overwhelming.

I'm interested... Just what does the interior of Bill G's intestines look like? How do you breathe in there? Doesn't the smell bother you or doesn't his shit stink? Why are you such a corporate tool of microsoft? How long until your parents kick you out of their house?

    Favorite    Flag as abusive Posted 12:57 PM on 02/27/2008

Typical vial Socialist Pig you are. Anti-American, Anti-Business, Anti-Freedom Socialist. Go smoke your hash and wreck your own life. I just hope you don't bread. Of coarse having children might interrupt your Narcissistic pot smoking lifestyle. Abortion on demand? To bad your mother didn't think about it.

    Favorite    Flag as abusive Posted 09:22 PM on 02/27/2008

Does the EU ever levy billion dollar fines against any European companies?

    Favorite    Flag as abusive Posted 11:13 AM on 02/27/2008

If an European company egregiously break anti-competiveness laws, yes the EU does prosecute.

    Favorite    Flag as abusive Posted 01:00 PM on 02/27/2008
- gba I'm a Fan of gba permalink

yes

    Favorite    Flag as abusive Posted 01:05 PM on 02/27/2008

"Does the EU ever levy billion dollar fines against any European companies?"

Of course. But then again, I guess you don't get Euronews in your trailer park...

    Favorite    Flag as abusive Posted 05:57 PM on 02/27/2008
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