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Microsoft Hit With 280m Euro Fine 527

Posted by CmdrTaco
from the thats-a-lotta-bread dept.
Craig Mason writes "The BBC Reports that "Microsoft has been fined 280.5m euros ($357m; £194m) by the European Commission for failing to comply with an anti-competition ruling. The software giant was hit by the fine following a long-running dispute between the US firm and EU regulators. The move follows a landmark EU ruling in 2004, which ordered Microsoft to provide rivals with information about its Windows operating system. EU regulators also warned Microsoft it could face new fines of 3m euros a day.""
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Microsoft Hit With 280m Euro Fine

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  • WOW! but.... (Score:3, Insightful)

    by i_want_you_to_throw_ (559379) on Wednesday July 12, 2006 @08:41AM (#15704437) Homepage Journal
    MSFT has a market cap of 230-something billion [yahoo.com]. Substantial? Not really.
  • Speedbump? (Score:1, Insightful)

    by gentimjs (930934) on Wednesday July 12, 2006 @08:43AM (#15704448) Journal
    Does a guy driving a hummer really notice a 1-inch speedbump? Microsoft's CFO will probably be laughing as he draws the fine from pettycash.....
    Add a few zeroes on the tail end, then we'll see if they notice.
  • Re:Irony (Score:3, Insightful)

    by D.B. Tits (963332) on Wednesday July 12, 2006 @08:45AM (#15704465)
    so, you must be living in the United States of Protectionism?
  • Easy (Score:3, Insightful)

    by gentimjs (930934) on Wednesday July 12, 2006 @08:46AM (#15704471) Journal
    The same thing that happens whenever a big company doesnt pay a fine. Absolutly nothing.
    Since you cant put a corporate entity in jail, and current structures are such that shareholders and executives face few legal penalties for the actions of the corporation (rather than thier own personal actions, such as in the enron ordeal) there's little real incentive for them to actualy pay up.
  • by JohnFluxx (413620) on Wednesday July 12, 2006 @08:52AM (#15704506)
    I went to the MSNBC website to check. They do have that story, but a fairer comparision would be the story that was posted a few minutes before it:

    Microsoft fined 280m over EU antitrust ruling
  • by Ekhymosis (949557) on Wednesday July 12, 2006 @08:54AM (#15704516) Homepage
    I agree with the folks that posted about the whole "drop in the ocean" or "280 million euros is barely a dent" arguments. Until the EU hits them with even bigger fines or stiffer penalties, all MS is going to do is whine and moan and complain and stall stall stall and occasionally release whatever the EU demands.

    It's not really hurting them financially, but maybe all these fines will a.) start adding up and b.) start making average people pay attention to how MS is screwing other companies up. But chances are, the average person doesn't care about MS's tactics, all they want is their damn computer to work, politics be damned. And that is why, at the end of the day, MS wins. (Mayhaps that made no sense, but it's late and I'm dead tired)

  • by 91degrees (207121) on Wednesday July 12, 2006 @08:56AM (#15704532) Journal
    What would happen to the world if Microsoft said "Ok, enough's enough. 'Frig' you all!" and shuts down!

    The people who made the decision would get sued by their shareholders, employees and their customers simultaneously.
  • Re:2 days (Score:3, Insightful)

    by owlnation (858981) on Wednesday July 12, 2006 @08:58AM (#15704541)
    No, it is a bit more of a deal than just the face value.

    Mud sticks. The EU has declared that MS should be punished for breaking the law. This does also negatively affect the MS brand by reducing consumer confidence and encouraging corporations to think twice.

    Admittedly that's still not yet enough to really really hurt MS, but it will sting a little more than it looks.
  • Interesting (Score:3, Insightful)

    by Opportunist (166417) on Wednesday July 12, 2006 @09:01AM (#15704562)
    So a company can, at max, be fined 5% of its income.

    I, on the other hand, can be fined for amounts that exceed my income by a few 100 percent.

    I'd sue. If I could afford it.
  • Re:WOW! but.... (Score:5, Insightful)

    by TheRaven64 (641858) on Wednesday July 12, 2006 @09:06AM (#15704601) Journal
    It's still less than they ended up paying Eolas for patent infringement, however.
  • Re:Speedbump? (Score:2, Insightful)

    by Anonymous Coward on Wednesday July 12, 2006 @09:07AM (#15704608)
    Does a guy driving a hummer really notice a 1-inch speedbump?

    yes when he hits it at 80mph, it will rattle his teeth and probably launch him to the ceiling.

    It's persepctive. A ferrari testerosa will feel it at 5 mph, the hummer will feel it at 20+mph

    the ferarri is much more expensive and better built.

    SO are you equating microsoft with a large lumbering overpriced and slow vehicle that is horribly inefficient?
  • by Opportunist (166417) on Wednesday July 12, 2006 @09:07AM (#15704610)
    Nothing. It's simple as that. Nothing would happen, immediately.

    Of course, there would be a huge vacuum in the end user OS market. But then, there's nobody that keeps you from copying your OS. People would probably not be able to activate their WinXP anymore (unless someone writes a, then legal, crack/patch for it), so they would probably step back to Win2k. Copy it, it's legal (the one holding the rights is "dead". Because if there was someone who picked up the rights for the systems, the whole point would be moot since he would also be responsible to keep the system running).

    For the next 3-4 years, people would 'survive' on the old systems. They're good enough to exist for a little longer. And then other OS manufacturers will step in. Apple will certainly try to push into the market, now that they have the ability to run on x86 systems. Linux distributions will try to expand their market share, trying to break into the low-end user market. Sun might try a stunt to get out of the hole they're in. And of course IBM would certainly try to regain some of their business partners.

    So I'd say if MS just said "fu.. you, I quit", the result would be a bomb in the IT sector, markets and stocks would go bonkers for a few days or even weeks, but I doubt there would be any real fallout.
  • by MarkByers (770551) on Wednesday July 12, 2006 @09:08AM (#15704613) Homepage Journal
    But before we all bash them too too hard -- where, again, are the usable Linux desktops that we'd like to have to replace Windows???

    Give us the documentationthen we will write you your Windows replacements!!! What do you think this whole case is about???
  • by Gadzinka (256729) <rrw@hell.pl> on Wednesday July 12, 2006 @09:09AM (#15704615) Journal
    What happens if they don't pay?

    The same thing that happens when Citizen Joe doesn't pay. Couple of notices, first from authorities, then from collection agencies. Then freezing of assets. If it still doesn't help, liquidation of assets, or company.

    Robert

  • by mcwop (31034) on Wednesday July 12, 2006 @09:12AM (#15704633) Homepage
    I hope they use it to switch away from MS products, and not give it right back to MSFT by upgrading to Vista.
  • Re:2 days (Score:5, Insightful)

    by Whiney Mac Fanboy (963289) * <whineymacfanboy@gmail.com> on Wednesday July 12, 2006 @09:13AM (#15704638) Homepage Journal
    Are you sure?

    I presume you're refering to figures on this page [wikipedia.org] that puts MS's net income at US$12.25 billion (EU 9.63 billion) - Around 26m euros/day.

    So, it would take them a little over 10 days to recover it, furthermore, you're comparing the fine for a single region to their world wide profits.

    Its a pretty big deal, not just the cash, but the possibilities for further fines (or harsher penalties).
  • Re:WOW! but.... (Score:3, Insightful)

    by fabs64 (657132) <beaufabry+slashdot,org&gmail,com> on Wednesday July 12, 2006 @09:14AM (#15704652)
    No... it's a regulated market, and the EU has quite a bit of say funnily enough.
  • Re:2 days (Score:5, Insightful)

    by Tx (96709) on Wednesday July 12, 2006 @09:19AM (#15704681) Journal
    Paying the fine doesn't release them from having to comply with the ruling. They now have to pay the fine and comply with the ruling, otherwise further fines or sanctions are possible.
  • Reality check (Score:5, Insightful)

    by Anonymous Coward on Wednesday July 12, 2006 @09:23AM (#15704704)
    So many stupid/nonsense answers. Reality is

    1) Yes, the EU can enforce the money. If MS doesn't pay, EU can hit them with sanctions (what do you think, how big is the EU part of MS revenue pool. Right, pretty relevant) and finally seize their physical assets. (Guess what, MS exists outside the US)

    2) MS has no threatening potential against the EU. What should they do: Increase prices? --> antitrust case! Threaten to pull out? --> They would cut their own profits significantly. EU could immediately legalize copies from the US (they wouldn't, but let's say Win/Office is declared important for national security or something...)

    3) The US government will not put pressure on the EU here. Yes, they may protest, yes, they may have some impact, but come on guys. Where not talking about some small banana republic. Also look at the history of the EU anti-trust comission. Remember the GE/Honeywell-merger?

    4) Yes, the fine does matter. 280m is a lot of money also for MS, from end of July on it will be 3m/day=~1b/year=~8% of EBIT (probably increasing over time). Yes, that DOES matter. What will financial markets think of that, what will that do to stock options of MS managers?

    Summary: MS will pay, MS will obey and try to comply (they already started, just too slow...) with the ruling, MS will of course continue to use all means of lobbying (which is their good right).

    Now the more interesting question is, if they have a chance with their appeal before the European Court of Justice, which doesn't look too bad for them...

  • Re:2 days (Score:4, Insightful)

    by laffer1 (701823) <lukeNO@SPAMfoolishgames.com> on Wednesday July 12, 2006 @09:26AM (#15704725) Homepage Journal
    Not only that, but they have to spend quite a bit of money on vista and office development and later advertising. They've dropped massive amounts of money into xbox products. It may have a small impact on their advertising budget for vista initially.
  • by Geccie (730389) on Wednesday July 12, 2006 @09:40AM (#15704828)
    Exactly. Microsoft is a CONVICTED MONOPOLY that uses its monopoly position to suppress / prevent competition. One of their methods has long been to extend and abstract standard protocols. In the server / desktop space, they are trying to leverage the desktop monopoly into a server monopoly by hiding protocols needed for authentication, data storage, etc. Thus the EU commission has ruled that M$ must publish the protocol necessary to communicate with the desktop systems. This is due to the fact that M$ created / stole / modified / extended the desktop communication protocols!

    What will it take to bribe / suppress / crush these people in Europe.
  • Re:WGA and the EU (Score:4, Insightful)

    by LarsG (31008) on Wednesday July 12, 2006 @09:41AM (#15704836) Journal
    First, making a company give competitors trade secrets in immoral.

    Sure, it isn't nice. But then again the goal of sanctions isn't to be nice but to remedy the problem. MS was found to be in violation of antitrust law, and forcing MS to document interfaces so that competitors can more efficiently make interoperatible software was seen as the most efficient remedy.

  • by Kadin2048 (468275) <slashdot DOT kadin AT xoxy DOT net> on Wednesday July 12, 2006 @09:49AM (#15704880) Homepage Journal
    Microsoft has a monopoly. Therefore, it's a pretty good assumption that they've done their market research and have already set the price of their products for maximum revenue generation: the point at which the sales you'd lose from increasing the price overwhelm the additional income. (There's probably an economics term for this point, but it's been a while...)

    Any involuntary price increase at this point can't be a good thing for them, because (assuming rational behavior) they've already set their prices for optimum profit. Increasing them further might not make people immediately switch from Windows, but it could change purchasing patterns in other ways: slowing the upgrade cycle, making piracy or theft more attractive, etc.

    True, most people would just bend over and take it, but Microsoft is already giving it to them as hard as they can -- forcing them to be harder isn't good for them. The damage to MS might be insignificant, though.
  • Re:Easy (Score:3, Insightful)

    by fireboy1919 (257783) <rustyp@freeshellLION.org minus cat> on Wednesday July 12, 2006 @09:51AM (#15704891) Homepage Journal
    The only way the EU could actually enforce this would be to threaten, essentially, trade sanctions.

    This just isn't true. It's much easier to seize assets of a large corporation than it is for an individual. They can just take the money.

    Who controls the banks and credit agencies in Europe? (here's a hint: it rhymes with "la snoverning hodies."

    Even if Microsoft stopped using Europe as a place to store their money (which they really can't do if they're going to have any people over there - they need a place to store payroll/etc), any money headed *to* Microsoft can be intercepted and replaced with a deduction in Microsoft's debt.

    Of course, if the fine is repeatedly levied it becomes a sort of trade sanction, doesn't it?

    Except that instead of taking a cut of each dollar MS makes, they're just going to take all of it until the daily fine quota has been filled...which likely means that they're going to be bleeding Microsoft's EU holdings dry after a pretty short time.
  • Re:wth? (Score:5, Insightful)

    by Decaff (42676) on Wednesday July 12, 2006 @09:51AM (#15704892)
    This is just getting stupid.
    M$ is getting F'd in the A because they built an o/s that a business 'chooses' to use. That business wants to get additional software that integrates with their servers as smooth as possible. Business chooses M$ software because it smoother than the competition (and not by much I must add).
    I really don't understand???? Whats the problem here?


    Because of something called a 'monopoly'. Microsoft have overwhelming dominance on the desktop. They are using that dominance to sell servers, which is a separate market. Using monopoly dominance in one market to influence sales in another is illegal.

    Microsoft server software integrates more smoothly than the competition with their desktop systems because their desktop systems require specific protocols for this integration which Microsoft are keeping secret. Other systems have managed to replicate this only by reverse-engineering what is seen to go across networks.

    Microsoft could easily have provided good integration with desktop systems using standard or existing protocols (they have proved in the past that they can produce quality implementations of such things).

    None of this would matter if Microsoft were not effectively a monopoly presence on the desktop (that does not mean total dominance - it means enough presence to seriously influence other markets).

    Clear now?
  • by vadim_t (324782) on Wednesday July 12, 2006 @10:04AM (#15704980) Homepage
    Perhaps, but let's suppose MS decides to get out of the EU. The EU still could decide to legally dissolve MS in their territory, and to seize all assets and bank accounts.

    Once MS loses all presence in the EU, who is going to be bringing lawsuits for copyright infringement?
  • by Carcass666 (539381) on Wednesday July 12, 2006 @10:15AM (#15705076)

    What will work is redirecting the money wasted on legal action in a bonafide attempt to ascertain the feasibility of switching servers and workstations to Linux. They won't be able to do it everywhere, but they could concentrate on the following:

    • Migrating from Exchange to the newly announced Notes on Linux
    • Setting up file storage shares on Linux/Samba instead of Windows Server/Windows Storage Edition
    • Migrating targeted groups of users from Microsoft Office to Open Office ("power" users may be harder to switch, but the guy using Word as a memo authoring package will be able to)
    • Migrating ASP/ASP.NET applications to Java Server Pages (or maybe PHP)

    Investors won't freak out because of a arbitrary fine that Microsoft won't end up paying (they'll settle on a lower amount or give away licenses or something). Investors will freak if an entire continent starts a concerted effort to shut down a significant part of Microsoft's revenue stream.

  • Precedent (Score:3, Insightful)

    by SleeknStealthy (746853) on Wednesday July 12, 2006 @10:26AM (#15705169)

    I am as big of a Linux finatic as the next slashdotter, but I am having a hard time understanding the basis for the magnitude of this fine. I am a firm believer that Microsoft has its monopoly because Microsoft Office has consistently been the most robust office package on the market. I have to run VMWare at home just because I can't use another office product.

    However, the information that the EU demands seems to be nothing more than an extortion attempt. Samba has worked flawlessly with Microsoft's SMB implementation for years, and I can add linux to a windows domain, authenticate agains a Microsoft ADS and plugin to Microsft Exchange server with Evolution. So what is the real issue, all of these functions have been created without taking anything from Microsoft, but rather from innovation from the Linux community.

    I am not going to debate whether or not Microsoft has used its market share for good or ill, but I don't see how it much affects any other operating system. Corporations have always commanded the popular OS and companies choose the OS on what platform will make the employees the most efficient. Microsoft Office is still unreplaceable and it is the main anchor to the Windows platform. Office 2007 is one of the best software products I have used to date, so I don't see that going away. It will be the slow detereriation of the desktop that erodes the grip of Windows, not litigation from governments over non-existent issues

    At least this is my take. If I had a car that controlled 90% of the market, would it be fair to make me compete without seats or a stereo? Who even cares, linux and apple technologies and innovations are maturing and besting such commodity apps. such as media players, web browsers, picture managers, etc.

  • by Anonymous Coward on Wednesday July 12, 2006 @10:45AM (#15705327)
    Please remember to deduct from the GDP of all US citizens the payments of interest on the Worlds No. 1 debt.
  • by WhiteWolf666 (145211) <sherwin@nosPam.amiran.us> on Wednesday July 12, 2006 @10:47AM (#15705339) Homepage Journal
    Microsoft has a monopoly. Therefore, it's a pretty good assumption that they've done their market research and have already set the price of their products for maximum revenue generation: the point at which the sales you'd lose from increasing the price overwhelm the additional income. (There's probably an economics term for this point, but it's been a while...)

    The term is "monopoly profits".

    Any involuntary price increase at this point can't be a good thing for them, because (assuming rational behavior) they've already set their prices for optimum profit. Increasing them further might not make people immediately switch from Windows, but it could change purchasing patterns in other ways: slowing the upgrade cycle, making piracy or theft more attractive, etc.
    Yes, it does, basically, work like this. The point of charging "monopoly" profits is to get the consumers to buy an optimal number of products, X, at a high price, Y. The X sold under a system of monopoly profits is significantly lower than X2 that would have been sold under a free market, but the Y is increased at such a level (compared to the Y2 of a free market) that it doesn't matter.

    The sole limiting factor of monopoly profits is the market's ability to bear these prices. At a certain point, consumers run out of dollars to spend on Operating Systems; that's the max price.
  • by Elektroschock (659467) on Wednesday July 12, 2006 @11:18AM (#15705611)
    Of course they can. Competition law is not IPR law. Different legal systems. When in war you cannot ask for compensation of bombine damages. This does not mean that your property isn't protected, it is just that your nation is at war. Same goes for competition law.

    "The company ... says it was only this spring that it fully understood what it was required by the Commission to do, and had duly put a team of 300 people to work to supply the information."

    You know, when you play these silly games you make reasonable people look at you like a fool. Microsofts communication policy and corporate affairs policy is asperger. You can play these games for a while but a hard landing and declining support is what you have to expect.
  • Re:WOW! but.... (Score:4, Insightful)

    by Phillup (317168) on Wednesday July 12, 2006 @11:44AM (#15705809)
    Microsoft could pull out of Europe totally.

    And get the attention of every other country that uses their software, making it painfully obvious how stupid they've been by locking up their data in a format they don't have access to?

    I don't think so...

    You think ODF has a little momentum right now? This would litterally trigger warp speed!!
  • Re:Precedent (Score:3, Insightful)

    by MrNemesis (587188) on Wednesday July 12, 2006 @01:02PM (#15706351) Homepage Journal
    Samba has worked flawlessly with Microsoft's SMB implementation for years, and I can add linux to a windows domain, authenticate agains a Microsoft ADS and plugin to Microsft Exchange server with Evolution.

    Really? I was under the impression that the public documentation for SMB was a) hugely out of date and b) wrong in many cases. Much of the hard work of projects like Samba has been done by painstaking packet sniffing and reverse engineering. Even now, Samba still can't act as an AD domain controller (unless you count the highly experimental samba 4). Why is this? Are the samba team lazy and stupid? Or maybe perhaps it's because figuring out what Windows 2003/CIFS is doing is damned hard...? We use Samba for a file server at work with AD, and it works great, but it has a *very* long way to go before I'd say it was compatible.

    Same goes for Exchange - the protocols are poorly documented and obfuscated to hell and back, and pretty much the only way to get things to talk to it reliably is to use MS API's. Either that or you have to pony up dosh to have a peek at the protocol under a breathe-a-word-of-this-and-we-kill-you NDA. Why does Evolution even need a plugin? Why can't it talk to Exchange directly? I've been itching to dump Exchange at work but I just can't find a competing product that does what Exchange does without horrific things like Outlook plugins.

    It's these secret formats and protocols that mean we can't apt-get install courier-exchange samba-ad_dc, and it's because of this hostility to developers of non-MS platforms that half of this case came about in the first place.

    Disclaimer: I'm a Linux guy through and through, but I actually think MS can write some damned fine software when they want to. I just feel the company as a whole is evil.
  • Re:WOW! but.... (Score:4, Insightful)

    by Petrushka (815171) on Wednesday July 12, 2006 @05:20PM (#15708527)
    People keep bringing this lunatic idea up whenever this topic comes up. It's silly. Just remember this: it would be about as intelligent for Microsoft to pull its products from the EU as it would be for Microsoft to pull its products from the US. I.e., not very.

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