EU Regulators Fine Microsoft $1.3B

(AP)  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.

She 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.

Microsoft's shares were down 24 cents to $28.14 in afternoon trading.

[kennedy7955]

$1.3 bill is not chump change to anyone except the US government, which spends that in a couple days in Iraq. The US government can **** that much away building a bridge to nowhere or digging a hole in Boston.

But $1.3 bill is a lot of money to any company even to MS. More problematic and potentially damaging is what the lawsuit represents, its a billboard advertising to every government in the world that suing MS is the way to make lots of easy money.

[kennedy7955]

I wonder what this lawsuit will cost the US government in tax credits to MS for the losses.

[kennedy7955]

The US government created the blueprint for this lawsuit brought by the EU against MS. The US government went after MS for anti-trust issues, paving the way for Europe and other countries to chase down and fine America''s top company.

Absolute idiocy on the part of the US government to attack one of its own, making way for further lawsuits from other countries. The fine and penalties could have been much worse - but the long term implications could be very damaging for MS, and very lucrative for its foreign competitors.

[Syndicate]

I don''t know. This is like demanding Ford share their trade secrets with Toyota. Its Micrsofts product and technology. If Sun or any other company wants to know what Microsoft is doing they can purchase which ever product they are interested in and decompile it. then they can read exactly what Microsoft is doing. If they do not have this capability never fear. I will not charge more than a couple hundred thousand to read the 1s and 0s for them and tell them what they mean. It really is that simple its all written in assembly for anyone to read.

[jwind11]

On hearing the announcement, Bill Gates pulled out his Titanium Card and tossed it to the Judge, saying,
"Keep the change, chumps"!!!,....."And I''''m closing down business in Europe, so you can call Steve Jobs if you need any computer *****",...."Other than that, you can shove your verdict up your collective assses"!!!......

Posted by veteran71 at 07:22 PM : Feb 27, 2008

another incoherent post by retard71 i mean veteran71

[singingrick]

It''s hard to be an American company in Europe. Since we elected the idiot Bu$h, they all hate us.

[runningralph]

Business in the big bad world is cut throat. Find a market, try to get an edge, and charge what the market will bear. If the law blocks you, try to find a way to circumvent, and charge what the market will bear. Winner take all. Microsoft is one of the big winners.

[shanev137]

$1.3B hahahaha...that is chump change to Microsoft.

[jowand]

Enforcement in a U.S. court is a non-issue. The fine was imposed in Europe. Either they pay it, there, or they stop selling their products there, and close their offices there. Or maybe MS executives there go to jail. At least the Europeans have the intestinal fortitude to enforce their own laws. Not so in the U.S. legal system. IMO MS should have been broken up years ago. One company for operating systems, another separate company for applications. We would all be better off.
Posted by farmerbb at 05:52 PM : Feb 27, 2008

When it comes to international trade the EU is the Mafia of it. It''s all about stealing MicroSofts data which they, MicroSoft, hs spent billions developing; the French and Germans are good at this kind of thing.

[farmerbb]

Enforcement in a U.S. court is a non-issue. The fine was imposed in Europe. Either they pay it, there, or they stop selling their products there, and close their offices there. Or maybe MS executives there go to jail. At least the Europeans have the intestinal fortitude to enforce their own laws. Not so in the U.S. legal system. IMO MS should have been broken up years ago. One company for operating systems, another separate company for applications. We would all be better off.