EU set to charge Microsoft over ruling breach

WARSAW/BRUSSELS Thu Sep 27, 2012 1:12pm BST

A variety of logos hover above the Microsoft booth on the opening day of the International Consumer Electronics Show (CES) in Las Vegas January 10, 2012. Microsoft announced earlier this is the last year they will have a booth at the show. REUTERS/Rick Wilking

A variety of logos hover above the Microsoft booth on the opening day of the International Consumer Electronics Show (CES) in Las Vegas January 10, 2012. Microsoft announced earlier this is the last year they will have a booth at the show.

Credit: Reuters/Rick Wilking

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WARSAW/BRUSSELS (Reuters) - Microsoft Corp will be charged for failing to comply with a 2009 ruling ordering it to offer a choice of web browsers, the European Union's antitrust chief said on Thursday, which could mean a hefty fine for the company.

U.S.-based Microsoft's more than decade-long battle with the European Commission has already landed it with fines totaling more than a billion euros ($1.28 billion).

The Commission, which opened an investigation into the issue in July, is now preparing formal charges against the company, EU Competition Commissioner Joaquin Almunia said.

"The next step is to open a formal proceeding into the company's breach of an agreement. We are working on this," Almunia told reporters at a conference in Warsaw.

"It should not be a long investigation because the company itself explicitly recognized its breach of the agreement," he said.

This is the second time Microsoft has failed to comply with an EU decision. If found guilty of breaching EU rules, it could be penalized up to $7.4 billion or 10 percent of its revenues for the fiscal year ending June 30, 2012.

U.S. chipmaker Intel holds the record for the biggest ever fine at 1.06 billion euros ($1.36 billion), which was imposed in 2009 and represented 4.15 percent of its 2008 turnover.

Keen to avoid more regulatory problems, Microsoft, the world's largest software company, has blamed the latest run-in with the EU watchdog on a technical glitch.

Microsoft declined to comment on Thursday.

MAKING AN EXAMPLE OF MICROSOFT

Antitrust experts said regulators may use the case to deter other companies which do not follow through on their commitments.

"They (regulators) would be looking to make an example, given the size or the company and the long-running saga. The size of the fine could be fairly significant," said antitrust lawyer Rachel Bickler at Brussels-based Nabarro.

Market share of Microsoft's Internet Explorer in Europe has roughly halved since 2008 to 29 percent so far this year as it has lost clients mostly to Google's Chrome.

Chrome controls 29.3 percent of the European browsing market, while Mozilla's Firefox has 30.3 percent of the market, according to web research firm Statcounter.

Microsoft agreed nearly three years ago to allow European consumers better access to rival browsers in its Windows software, settling an antitrust case and avoiding a penalty.

The company acknowledged its mistake in July, saying it was now distributing software with the browser option and also offered to extend the compliance period for an additional 15 months.

Almunia also warned Google of a lengthy legal process ahead if it does not do more to soothe concerns that it may have undermined competitors.

"If remedies offered by Google can eliminate our concerns, we will succeed in reaching an agreement. Otherwise, the legal road is a long one," he said on the sidelines of a forum on competition in the Polish capital.

Google is in talks with the Commission to resolve concerns about its business practices, following complaints from Microsoft and other rivals.

(Additional reporting by Tarmo Virki in Helsinki; Writing by Foo Yun Chee; Editing by David Holmes and Jane Merriman)

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Comments (3)
Raymond.Vermont wrote:
EU set to charge Microsoft over ruling breach

What happens if Microsoft, refuses to play ball with the EU and just tells them to take a hike?

Maybe Microsoft could shut down Brussels by simply refusing to allow its products to be used with the IT network of Brussels Command & Control Centres IT systems…

Sep 27, 2012 10:05pm BST  --  Report as abuse
kalidas_r wrote:
The money paid in fines to the European Court goes back into the EU budget. Which is, clearly, a shame.

I would still have respect for European Competition Commission if the money went into a global fund that had nothing to do with the EU or EU Budget.

Microsoft’s market share has constantly been dropping in the Browser market. That proves that, if companies make good products, customers will install them on their OSes. Microsoft can’t give a launch-pad to all manufacturers. Good product don’t need support of the kind ECC wants. Bad products can’t survive even with the kind of support ECC wants MS to provide to them. The consumer has proven the ECC wrong by choosing other browsers no matter what MS bundles with the OS. Because the consumer is not as dumb as the ECC.

A great benefit of Microsoft bundling a browser is that – if someone has a computer that needs to access an intranet but can never connect to internet (let’s say because they don’t have internet connection, like billions of people), they will still NEED a browser.

Microsoft cannot bundle other companies’ products into their OS, just like other companies don’t return that favor to Microsoft. Microsoft cannot take responsibility for other manufacturer’s product or guarantee that their code won’t be malicious to windows. For example, for all its merits, Firefox was a drag on memory until very recently.

So, EU, build some competence and stop suing companies to get money. And ECC, hire some competence.

Sep 28, 2012 5:36pm BST  --  Report as abuse
Allaunthefox wrote:
They could, if they wanted to give that government a excellent excuse to completely change over to Gnu/Linux. Something I’m sure they are quite loath to do. You don’t bite the hand that feeds.

Sep 28, 2012 5:39pm BST  --  Report as abuse
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