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The European Commission fined Microsoft a record €899 million (£673 million, $1.4 billion) today for defying sanctions imposed on the company for abusing its dominant position in the software market.
The fine — the largest levied on any business — was imposed in addition to the €497 million penalty Microsoft was forced to pay in 2004 and the €280.5 million it paid in 2006, bringing the total the company has now been forced to pay the Commission to €1.68 billion ($2.5 billion).
The Commission said in a statement that no company had ever ignored the sanctions it had imposed as a result of anticompetitive behaviour.
“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,” Neelie Kroes, the Competition Commissioner, said.
"I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance with the Commission's March 2004 decision," she added.
Microsoft said in a statement that the fines related to "past issues" that had been resolved, and that as of October last year it was in "full compliance" with the Commission's 2004 decision.
In 2004, the Commission ruled that Microsoft had stifled competition by bundling up its media player software with its dominant Windows operating system.
It also said that Microsoft had withheld information from the makers of other software which ensures that machines such as printers are able to communicate with computers running on Microsoft Windows.
Microsoft was ordered to provide the information.
It agreed to do so, but said that it would charge royalties because the protocols it was releasing amounted to valuable intellectual property.
The Commission found that the information was not sufficiently innovative to warrant the amount was Microsoft was charging, and the royalties were unreasonable.
At the time, the Commission fined Microsoft €497 million, which was followed by a further €280.5 million in July 2006 when the company failed to comply with the imposed sanctions.
Today's fine picks up where the second charge left off, and amounts to the sum of daily penalties Microsoft accrued between July 2006 and October last year, when it agreed to reduce the royalties it was charging rival software makers.
Microsoft initially set its royalty rate at 3.87 per cent of the revenues from any product which licensed one of its patents.
In March last year, European authorities said that the rate was unfair, and two months later - under threat of further fines - Microsoft reduced it to 0.7 per cent.
In September last year, Microsoft lost its appeal against the Commission's original 2004 decision and fine.
In a landmark ruling, the European Court of First Instance held that the software firm had abused its dominant position in an attempt to cripple the competition, and ordered it both to share important software codes and sell its products separately, rather than bundled together.
Microsoft executives said they would abide by the court's decision, and in October agreed to reduce the company's royalty rate for patent licenses to 0.4 per cent.
They also said the company would charge a flat fee of €10,000 for information that would ensure that other companies' products could interact with Microsoft software.
Last week, Microsoft began providing additional information which, it said, would ensure "interoperability" between its own and other products.
The company released 30,000 pages worth of protocols which would help software makers write programs that could communicate with some of the Microsoft's flagship products, including the Vista operating system, Office 2007 and Exchange Server 2007.
Microsoft's long-running dispute with the European Commission is not yet concluded, however.
In January, the European Commission opened two new anti-trust investigations into Microsoft's practices - one concerning inoperabilitity, the other about the bundling together of separate software products following a complaint by the maker of a rival web browser to Microsoft's Internet Explorer.
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Chris from London, if Microsoft pulls out of Europe, there will be an economic disaster. There won't be any Windows Updates, and every single PC will be affected by Conflicker. Open source software wouldn't be every where, because most of the programs used in business are proprietary & Windows-only.
Joshua Issac, Northampton, United Kingdom
Anybody know if the previous fines have been paid and to what use the European Commission puts these funds? The EU is well known for it's own very poor financial disciplines. One just hopes that theses funds are not being used to feather the nests of EU parliamentarians who are on a big gravy train already. One would trust that the funds are being channelled into worth while ITC projects.
Graham Bell, Cape Town, South Africa
I agree with A Williams, I think Microsoft should just pull out of Europe much like Apple threatened the French Government with. Who exactly is reaping the benefits of the massive fines that the EU are imposing on MS?.... It certainly doesn't appear to be the consumer.
There is no way businesses in Europe would be able to survive MS pulling the plug and the EU and MS would have to come to a more reasonable compromise
James Harrington, Windsor, UK
If Bill pull the plug on Europe's access to company's systems then this would be the end of MS . Open source would be everywhere in Europe and this would create a swift paradigm for the rest.
Chris, London/UK, UK
Unfortunately, revenue from EU combined with weak dollar makes paying the fine a cheaper option in the long run. Additionally, Microsoft's business practices were not always favorable back home either but there is little in remediation that can be done in US against a corporate behemoth. It's time, and we hope Microsoft walks with caution, that in the end should only be favorable to the consumer.
JP, Harrow,
Bravo EU, I'm glad that Microsoft will now have to open interoperability between Windows and other non-Microsoft applications and systems.
George, Yorkshire,
Are the EU now policing the rest of the world too?
SO, England,
I would hope that the fine will be used to recompense the companies which have overpaid their royalties, rather than going into the EU's coffers to be spent on who knows what?
David, Manchester, UK
Microsoft should simply lay off an equivalent number of staff in Europe to compensate for any fines such as these. This is a gross infringement on Microsoft's property rights and has nothing whatsoever to do with competition.
Charles Smyth, Belfast, Northern Ireland
P. Robinson I think you are completely wrong! Monopoly regulations are required especially for companies with such dominating positions like Microsoft. The fact that USA is not doing the same as the EU just shows how corrupt their political system is.
Just consider if nothing had been done by either USA or Europe ... pretty soon you could see microsoft not only integrating other pieces of software into their operating system but also completely refuse to integrate software that would compete with their own comercial offers such as Real Media player, OpenOffice, etc...
They are now trying to develop an alternative to flash (Silverlight). Just imagine they would use they dominating position on the OS to bully websites to start using they new technology instead of flash.
You might say that they have the right to do this but in my view this is wrong because their technology is closed to their own OS. Unlike flash you cannot use it in other OS systems such as linux.
Well done EU!
Duarte, Portrush, UK
The case against Microsoft appears to be utterly ridiculous. The specific objections regarding media player bundling and integrating Internet Explorer appear little different to other bundling of features. Microsoft are guilty of shipping too many features? I can't quite see how this serves the consumer. The specific arguments fail upon careful inspection. While many people have anti-Microsoft bias for both valid technical and historical business reasons, this case is embarrassing. I wrote earlier to the European Commission pointing out that other Media Players do exist for Windows and are very successful, co-existing easily. I would have thought this evidence would have made the theory that Microsoft made this task impossible somewhat incredible.The removal of the Media Player in the 'N' version did not serve anyone. It created a 'branch' of Windows that we all tried to avoid. If you don't like Media Player, install WinAmp. If you don't like IE then explore Firefox. It's all possible.
Neil Groves, Harwell, Oxfordshire
I wish I knew what the profit to fine margins are for Microsoft but I would be willing to wager that they have made money from ignoring the EU commission. I doubt that any other company would get away with the flagrant antitrust violations and customer abuses that Microsoft has got away with for so long. Why are Microsoft still in business ? I'm pretty sure no UK business would still be trading a hundredth of the time Microsoft has using these business practices.
Andy, Swansea,
If I had developed a software product and then someone wanted me to give it away just because I had cornered a market I would tell them where to get off. There software works yes its not perfect still has a long way to go. But if we leaves things to go the way they usually do by interfering committes and other companies trying to grab a slice of the action by moaning to the EU then the mess which will occur will not benifit any of us.
bill melsom, salisbury, wiltshire
I dont think it is fair on the businesses such as the ones producing printers, anti-virus software etc to be monopolised by Microsoft and unable to deliver their products to the wider audience. For this reason the Commission has rightly decided to impose further fines on the Microsoft.
Tornike, London, UK
I agree with AWilliams, Cradley Heath.
This is just another example of the unelected and overpaid EU bureaucrats trying to impose even more control over our everyday lives. MS has spent billions on developing their systems, why should they then just hand this technology over to someone else?. MS have become the dominant player in the IT industry purely because individuals, companies and Governments chose to purchase MS products, rather than a competitors. The EU are simply unhappy that a centrally controlled European company cannot compete with the innovative, entrepreneurial and risk taking attitude of major US companies.
The EU needs to grow up and encourage individuals and major companies to invest in, and develop, an alternative to MS. Instead of taking the easy route by legally 'stealing' MS technology.
Pip, Sutton, Surrey
I for once totally DISAGREE with the EU! As much as I support the UK's membership this is just proposterous. This is code and software developed by MICROSOFT, it is theirs - how can we say that they have to help their competitiors to steal profit away from them!!!! It's absolutely ridiculous.
There is no rationale behind this decision whatsoever really - this is the EU going too far!!!
Gary Horlock, Crawley,
John, Bristol:
"Working hard to offer consumers value for money"
Have you seen the price of Vista compared to the USA. Microsoft are working hard to kill the competition so they can bump up there prices more like.
What we need is a credible rival OS System, but Microsoft wont allow that.
Mark, Essex, England
$1.4 billion should keep the EU gravy train running for a few months, but can someone please fine the EU on our behalf for their corruption and lax accounting? Auditors have refused to sign off the EU's financial accounts for 13 years running - in the real world the bosses of a company in such a situation would be facing criminal proceedings.
Chris K, Cheltenham, UK
This is an excellent example of what will happen if we join a Federalist Europe with one European government ruling.
We will have these silly people who have managed somehow to get chosen to hold high office, throwing around all sorts of rulings with the intention of making much money for themselves.
If I was Bill Gates, I would pull out of Europe completely, and sell directly to EU customers from the US and elsewhere.
No consumer cares about this campaign by Kroes against Microsoft, just a couple of companies with influence in Europe.
P.Robinson, Northants, England
I think that Microsoft's Vista locking out EVERY antivirus program on the planet might have something to do with this. Stopping millions of hardware items like printers, modems, and such like items because their software no longer works is probably just a side issue, even if it does cost bilions of other peoples money to rectify.
Dennis, Lundon,
This is nothing but a veiled attack on an company which is successful and therefore hateful. American too..
Since other software companies are supposed to have been hurt by Microsoft practices, of course this `fine` money will now be distributed among them. No? I cannot imagine why? Surely it can`t be the proven corrupt and shameless guzzling EU individuals have found a `legitimate` way to steal some more cash...
Bill Gates, pull out of Europe. You are a Yank. Tell them to get lost... More power to Microsoft. I am an Englishman, and my government has lumbered me with the EU too. Any room for one more over there?
Le Santo, Bath, UK
What a world we live in...
Its thier code they paid alot of programmer's a large wedge of cash to create, what right does the system have to question or fine Microsoft.
If they break copyrights then yes they should pay those that were ripped but saying they cant sell a complete OS is bad for every Windows user.
I believe this is no more than daylight robbery which will probably destroy the user friendly OS Windows provides.
Good Job EC! bring on 2012
J Danger, Coventry, UK
Oh well, more money in the pot for the EU officials to siphon into their back pockets. Vast salary, huge expenses, trips around the world to 'summits' etc. Meanwhile Microsoft are working hard to offer consumers value for money, which is what has made them successful.
Bristol John, Bristol,
Compared to the recent legal judgment that froze $12 billion in Venezuelan assets the Microsoft fine seems quite reasonable.
Gene Diefenbach, Kirkwood, U.S.
The fines go to reducing the contribution EU member states pay to the EU. They don't get added to the EU Budget.
Ryan, London,
The right thing to do but where will the money to pay the fine come from...
1) Bill Gates & MS management/shareholders
2) The customers
Russ Holmes, Glasgow,
So what happens to the money collected from these fines? Anyone know?
pete, brighton, uk
That amount to Mr Bill Gates is probably like paying a vehicle claming fine for the common joe bloggs like myself. It's still bad, but it won't make him homeless.
Mohammed, London, UK
I don't know for sure but I think, if I were Bill Gates, I would pull the plug on Europe's access to my company's systems because I think the the EC is motivated by jealousy of successful businesses. I would soon find out who needed whom most!!
AWilliams, Cradley Heath,
I'm glad the EU is showing companies who's boss! I just wish they'd move to get Britain's prices on par with the rest of Europe a little quicker...
Imran, Birmingham , UK