March 6, 2013
Microsoft Fined $732 Million For Antitrust Violations In Europe
Enid Burns for redOrbit.com — Your Universe Online
Tech giant Microsoft has been handed, and apparently accepted, a giant-sized fine by the European Union (EU) for failing to offer users a choice of browsers on its Windows operating system (OS), breaking a legally binding commitment that had been in place since 2009.As a result the European Commission has fined Microsoft $732 million US. The announcement was made Wednesday by Joaquin Almunia, the European Commission´s top antitrust regulator. This was the first time that European regulators had punished a company for breaking its antitrust commitment agreement.
“This is the first time we have seen a breach of a legally binding commitment,” said Almunia at a press conference in Brussels. “This is, of course, serious, whether it was intentional or not.”
“Legally binding commitments reached in antitrust decisions play a very important role in our enforcement policy, because they allow for rapid solutions to competition problems,” added Almunia. “Of course such decisions require strict compliance. Failure to comply is a very serious infringement that must be sanctioned accordingly.”
The penalty imposed Wednesday now puts Microsoft´s total fines over the past decade at nearly $3 billion US, reported The New York Times.
As part of a prior settlement with the EU following a competition investigation, Microsoft had introduced a 'Browser Choice Screen' option in March 2010 but had later dropped that feature in an update of Windows 7 in February of 2011. Microsoft said that this omission was a technical error.
Despite the excuse it said it will pay the fine and also issued a statement in response to the fine:
“We take full responsibility for the technical error that caused this problem and have apologized for it. We provided the Commission with a complete and candid assessment of the situation, and we have taken steps to strengthen our software development and other processes to help avoid this mistake — or anything similar — in the future.”
While Microsoft worked to remedy the glitch some watch dog groups have said this doesn´t go far enough.
“While it's highly likely that it was a technical mistake that broke the browser choice facility the fact that it remained broken for 14 months raises significant questions about Microsoft's ability and willingness to comply with the voluntary agreement with the EU,” Chris Green, principal analyst at the consultants Davies Murphy Group Europe, told the BBC on Wednesday. “At the same time the situation also raises concerns over the EU's ability to actually monitor the outcomes of antitrust agreements.”
For violating the past agreement Microsoft could have been fined as much as 10 percent of the company´s global annual revenue or about $7.9 billion US. To date the largest fine imposed by European authorities in an antitrust case was $1.4 billion US in 2009 against Intel for reportedly abusing its dominance in the high tech microprocessor market. Intel is appealing that ruling.
In regards to the Microsoft case the European Commission noted that it had taken into account both the gravity of the infringement as well as cooperation from Microsoft in determining the fine.
The apparent glitch reportedly affected some 15 million users in the EU, but it also came as Microsoft was already losing ground in the browser market. Microsoft´s Internet Explorer was already losing ground to Mozilla´s Firefox in early 2011 — with the two companies battling back and forth for the top spot. Since May of last year both were overtaken by Google´s Chrome, which is now the dominant browser in the European market according to StatCounter´s Global Stats.
Microsoft´s newest operating system, Windows 8, does include the choice screen for EU customers, but interestingly the EU allowed Microsoft to limit browsers on Windows RT, the OS designed for tablet devices.