Follow Slashdot blog updates by subscribing to our blog RSS feed


Forgot your password?

Microsoft Hit With 280m Euro Fine 527

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.""
This discussion has been archived. No new comments can be posted.

Microsoft Hit With 280m Euro Fine

Comments Filter:
  • the EU victim (Score:1, Informative)

    by zziggy ( 980206 ) on Wednesday July 12, 2006 @08:46AM (#15704472)
    "The judgment also called for Microsoft to debundle its Windows Media Player from its Windows operating system, and slapped the software firm with a record fine of 497m euros. " "Microsoft has been fined 280.5m euros ($357m; £194m) by the European Commission for failing to comply with an anti-competition ruling." fines... 497... 280 - did they pay anything? will they? ... it will take time.... plenty of time... they'll try to market this as being the new victim of EU...
  • Re:About time (Score:2, Informative)

    by Zyprexia ( 988133 ) on Wednesday July 12, 2006 @08:50AM (#15704493)
    The fine is based on the period december 16th, 2005 till june 20th, 2006. Microsoft had till December 16th to fullfil the requirements of the EC. Remember that this fine is added to the original fined 497M in 2004. And the EC is still counting until Microsoft has delivered all required documentation, but the ticker now says 3m per day. I don't believe there's a deadline set yet.. But i wouldn't be suprised if that would be set anywhere around December 20th 2006 (6 months as of june).
  • by JanneM ( 7445 ) on Wednesday July 12, 2006 @08:50AM (#15704494) Homepage
    What happens if they don't pay?

    What happens when anybody doesn't pay an outstanding court-ordered fine? Likely they'd just freeze their assets in Europe until it's paid. In extremis they'd sell off assets to cover the amount.

    Don't forget, this is a court-ordered fine - a punishment - upheld after an appeal. Nonpayment really is not an option. It will not come to that of course; just imagine what such an action would do to their credit rating and reputation.
  • Re:Debundling WMP (Score:5, Informative)

    by WhodoVoodoo ( 319477 ) on Wednesday July 12, 2006 @08:53AM (#15704511)
    The idea is that the EU claims (rather correctly, and you'll see why this is not an issue) that MS used it's desktop monopoly to attempt to gain a monopoly in the media player market. They were then forced to unnbundle WMP, which they did in Windows N. Also to pay that original fine we already heard about last year.

    Now here's where you lost the trail; the contention now is NOT ABOUT WINDOWS MEDIA PLAYER. It's about underlying windows APIs that the EU claims MS is leveraging to use their DESKTOP os monopoly (which is okay) to shoehorn their way higher up in the server space. What they required MS to do was provide their competition with information about the windows OS that would let competing products interoperate as smoothly as microsoft products.

    It's kind of a convoluted, complicated, and misreported case. The EU commision is saying "Look, you can't hide these details about your desktop os just so nobody can make a (whatever server) as good as yours, you can make the whatever server, but your competitors need to have equal footing. SO tell them how (whatever) works."

    theres a bunch more, 12000 pages of docs, source code sharing (under a restrictive license competitors must pay for, this is more complicated due to the possibility of DMCA claims) etc.
  • Re:Credit rating? (Score:5, Informative)

    by Kadin2048 ( 468275 ) <> on Wednesday July 12, 2006 @08:58AM (#15704542) Homepage Journal
    I know you're joking, but large companies really do have a "credit rating" -- it's called their bond rating or bond score. They don't just go to a bank and borrow money, they basically write their own fiat currency (bonds) and sell them to raise capital. Depending on the perceived health of the company, the bonds are perceived as more or less risky.

    I don't know Microsoft's offhand, but I'm betting it's pretty good...not that they need to raise capital, with the amount of money they have sitting around.
  • Re:WOW! but.... (Score:5, Informative)

    by Red Flayer ( 890720 ) on Wednesday July 12, 2006 @09:01AM (#15704560) Journal
    Market cap is not the important figure here, since that doesn't represent the actual capital that MSFT has on hand, but rather the market valuation of their shares. It's the income statement [] you want to look at.

    For the FY ending 6/30/05, MSFT had a net income of US$ 12.2 billion. So, a fine of US $357 million IS significant -- it's roughly 3% of their net income.
  • Re:Debundling WMP (Score:1, Informative)

    by dvice_null ( 981029 ) on Wednesday July 12, 2006 @09:02AM (#15704573)
    What word in the sentence "monopoly" you don't understand?
  • Re:WOW! but.... (Score:3, Informative)

    by arivanov ( 12034 ) on Wednesday July 12, 2006 @09:04AM (#15704581) Homepage
    The fine is as per old fine rules which caps it at 10% of annual turnover per year of misconduct which will be unpleasant for Microsoft, but can be sustained for a very long time. Even the disobedience fine is only 50% of the period of breaking the rules after the ruling which is painfull, but not lethal.

    Unfortunately the commission cannot apply the new rules which set a cap for the fine at 30% of backdated turnover and 100% of turnover past the violation. Now that level of fine would simply put any company out of business so even serial offenders like MSFT will have to sit up and notice.

    For more info see here: ncrease/ []
  • Re:wow (Score:2, Informative)

    by fritsd ( 924429 ) on Wednesday July 12, 2006 @09:07AM (#15704606) Journal
    It's backdated to december 2005 IIRC
  • by Flying pig ( 925874 ) on Wednesday July 12, 2006 @09:07AM (#15704609)
    Market capitalisation is a joke number, meaningful only to people who do not understand the most basic economic laws. At any time only a small percentage of a company's shares is traded, and the price reflects the "scarcity value". Market capitalisation is based on the ludicrous idea that the worth of a company = number of shares issued * current trading price.

    In fact, as with any situation where supply is (actually) relatively inelastic, if the supply side suddenly increased the price would drop dramatically. If Bill wanted to sell all his shares on Monday, how much do you think he would get for them? A lot, but nothing like the current price. The shares would be suspended as they started to go into freefall. Goes for houses, goes for Rembrandts, goes for shares. At one time during the Tokyo land price boom, Tokyo was capitalised at more, I believe, than the entire real estate of the US. Would you have swapped the US for metropolitan Tokyo?

    Microsoft's market capitalisation is unimportant and meaningless; what matters is the effect of ongoing fines on their day to day operations, the market perception, and the buying decisions made by large institutions who will be reading all about it in the FT, Handelsblatt etc.

  • by D.B. Tits ( 963332 ) on Wednesday July 12, 2006 @09:09AM (#15704616)
    Well, the EU is comparable to a Federal Government. The money will be added to the total EU budget.
  • Re:Easy (Score:5, Informative)

    by CowboyBob500 ( 580695 ) on Wednesday July 12, 2006 @09:13AM (#15704647) Homepage
    Since you cant put a corporate entity in jail...

    In the EU you can, sort of. Certainly in the UK, the board of directors are held directly responsible for the actions of the company. For example, there is a charge of "corporate manslaughter" here where the directors of a company can be put into prison for manslaughter if it can be shown that any deaths were caused by the actions of the company.

    Put simply, if MS do not pay the fine, then the minute Bill Gates, Steve Ballmer, or any of the top brass set foot in the UK (and most likely other parts of Europe too), they would be immediately arrested for non-payment of fines.

  • Re:Credit rating? (Score:5, Informative)

    by JanneM ( 7445 ) on Wednesday July 12, 2006 @09:17AM (#15704666) Homepage
    It also affects their ability to do certain types of business. Refusing to pay a fine like this automatically adds them on various blacklists that at least a lot of governmental agencies and large corporations do follow and means they'd be ineliglible for contracts with those organizations.

  • 2nd world countries? (Score:5, Informative)

    by MarkByers ( 770551 ) on Wednesday July 12, 2006 @09:21AM (#15704689) Homepage Journal
    Form a group with your fellow 2nd world countries.

    Have you ever compared the GDP of the EU with that of USA []?

  • by golodh ( 893453 ) on Wednesday July 12, 2006 @09:27AM (#15704727)
    I must say that I find the EU the embodiment of reasonableness in this case. Not only do I consider the fine fully justified, the EU is evidently taking very special care not to (unduly) hurt Microsoft while still getting their full attention. The EU is clearly after compliance .. not revenues. To a company such as Microsoft, the amount of 280 million Euros is quite affordable (as many others noticed), but it still is a lot of money.

    As I see it, the EU is telling Microsoft:

    "Ok, Microsoft you had your chance to document your API's two years ago as you were told to, but instead you chose to try and mess with us and we just don't believe you when you said you made an honest effort to comply. So here is your fine. If you think you are going to appeal your way out of this ... good luck to you. Now we know that you are working to better your lives, and we want your compliance more than your money, so we won't hurt you as much as we could have. We actually want you to do business in the EU, and for that reason we will go easy on you this time. Only ... if you think you can make a fool of us again, prepare for fines that *are* hurtful."

    There are worse attitudes I suppose.

  • Re:Debundling WMP (Score:3, Informative)

    by Kadin2048 ( 468275 ) <> on Wednesday July 12, 2006 @09:29AM (#15704748) Homepage Journal
    It's because they have a monopoly -- all the restaurant/automobile/whatever analogies in the world don't matter, if you don't factor in the anti-competitive aspect of the monopoly. If Microsoft were smaller, they wouldn't be having a problem; it's only because of their extremely dominant position that they have to follow special rules, because otherwise it would be impossible to compete with them.

    If you were a niche OS vendor and didn't want to share information on the inner workings of your system, so that you could make more money selling a highly-integrated application stack, that would probably be OK. It becomes anti-competitive when you have such an absurd proportion of the market that it's basically impossible for any company to compete with you, unless they make products that run on your OS. In that case, by keeping the details to yourself, you can suppress realistic competition indefinitely.

    Since this suppression of competition hurts the market in general and is bad for the consumer, I think the EU and other regulatory bodies are more than justified in doing whatever they think is necessary in order to remedy the situation. In this case, they're not going after the monopoly itself (as some of the proposed solutions to the US anti-trust case did) but after the behavior that suppresses competition itself: basically acknowledging that Windows is the de-facto standard and will be for some time, and requiring that Microsoft stop tilting the playing field in their own favor.
  • Re:Debundling WMP (Score:1, Informative)

    by Anonymous Coward on Wednesday July 12, 2006 @09:31AM (#15704766)
    Yes, If (say) Ford had 90%+ of the car market and only let you fit 'Ford Brand' stereos. So in other words it's a totally fatuous comparison and you're an idiot.
  • Re:Double Standard (Score:3, Informative)

    by mh101 ( 620659 ) on Wednesday July 12, 2006 @09:37AM (#15704803)
    It's not Mac OS X that bundles more software, it's the Mac computer. To compare apples to apples (no pun intended), you'd need to be comparing an iMac to a Dell or Compaq PC. All the big apps that the commercials brag about are actually part of the iLife suite, that Apple includes in when you buy a Mac. In the event that the EU doesn't like Apple including iLife with all new Macs, they can easily comply and include a mail-in coupon for a free copy of iLife or something like that. It's not like the apps are tightly integrated into the OS and they'd complain that they can't remove iPhoto without breaking the entire OS.

    As far as apps that are bundled with the OS, it's mostly all just small utilities (font book, activity monitor, calculator, etc.), OS features (Automator, Dashboard, etc.), and then the only larger apps are Safari, Mail, and iChat. And if you don't like them, you can simply drag them to the trash can and they're gone forever, unlike another popular OS from Redmond. IIRC, iTunes isn't even included as part of the OS but rather part of iLife (but is also a free download).

  • No, they couldn't (Score:4, Informative)

    by Anonymous Brave Guy ( 457657 ) on Wednesday July 12, 2006 @09:37AM (#15704813)

    The parent isn't insightful, it's simply wrong. Under WIPO treaties, to which pretty much every major economic power in Europe is a signatory, the EU can do no such thing. All the posts about cancelling Microsoft's copyrights are fantasy. Then again, pretty much every other post in this discussion seems to think this is just an ineffective slap on the wrist, without considering the likely consequences [].

  • Re:Debundling WMP (Score:5, Informative)

    by Anonymous Coward on Wednesday July 12, 2006 @09:42AM (#15704845) they'll be fining car manufacturers for selling cars with a specific brand of stereo/sound system and being anti-competitive.

    Your knee-jerk argument doesn't really hold up. Let's try some slight modification and see if we can get it to work, eh?

    Imaging one car manufacturer was responsible for producing 95% of the cars in circulation and aggresively used its position to limit the availability of cars from other manufacturers or the emergence of new manufacturers.

    Imagine they not only bundled their own brand stereo with the car, they made it virtually impossible to remove the stereo system without causing severe damage to the car, so that even if you were to install an additional stereo you'd have to keep the original stereo.

    Now imagine the car manufacturer starts using its imense wealth and market position to persuade content providers to release music encoded in a format only the above stereo can play (or charging hefty license fees to the smaller car/stereo manufacturers if they want to use this technology themselves to actually be able to play music).

    Finally, imagine the car manufacturer went out into the world and used its wealth to influence political decisions in their favour to help them maintain an effective stranglehold on the market and, at the same time, insidiously "educate" people while they're still at school into thinking that only one car manufacturer can give them what they need.

    Hope that helps.
  • by CurtMonash ( 986884 ) on Wednesday July 12, 2006 @09:43AM (#15704851) Homepage
    I was once an Institutional Investor-ranked analyst following Microsoft, although that was a long time ago ...

    Market cap does matter. Microsoft can sell stock to get cash -- or rather forgo repurchasing it.

    The income statement matters somewhat. If this were a true foreseeable-future ongoing cost, it would matter a lot more. But it will be over soon, one way or the other.

    The balance sheet it what matters most directly. They can pay the fines out of cash easily, I should think, not that I've actually looked at their balance sheet for quite a while.
  • Re:WOW! but.... (Score:4, Informative)

    by hey! ( 33014 ) on Wednesday July 12, 2006 @09:46AM (#15704860) Homepage Journal
    You're right that Market Cap is not the right thing to look at, at least in the short term. But income, while important, is not the full picture either.

    What you really want to do is look at the balance sheet and in particular at cash and cash equivalents, which are assets that can readily converted into cash on short notice. Also the cash flow statement. Cash is what determines whether you can meet your short term obligations, such as paying employees and vendors. Cash equals flexiblity and security. If you have cash on hand, you can weather a loss on your income statement. Likewise if you have healthy income, but it's in assets that cannot be liquidated, you can end up with a healthy income yet not be able to pay bills. Income is like food; if you don't have it, you're going to have to curtail your activities soon. Cash is like air: if you don't have it, you're dead right now.

    I once worked for a company that lost money for seven years straight. But it paradoxically grew all those years, in fact it continually lost money because it was plowing all its income into producing growth. The key was that the business genreated cash, and they could always pay last quarter's creditors out of this quarter's cash flow. The trick is to engineer a soft landing, because soon or later cash flow growth is going to falter, and the income statement buzzards will be roosting on your dying cash carcass.

    I haven't followed Microsoft closely in recent years, but historically MS is a business that generates loads of cash. Last time I looked, they had something like a billion and a half of cash equivalents on hand, and $350 million would represent something like 5% of their annual operational cash flow (not counting investments). It's enough on the income and cash side to make you sit up and take notice, but not a fatal blow. If they thought they could outmaneuver the EU regulators, they might well tighten their belts for a couple of quarters to end up in a stronger position later.
  • by Nagus ( 146351 ) on Wednesday July 12, 2006 @10:00AM (#15704956)
    EU: MS, you didn't pay, you're fined 2.5m a day.

    Wrong. They did pay the previous fine of some 490M EUR. They now get a daily fine because they still haven't complied with the court's ruling from that trial.

    You're making it sound as if the imposed fines had no effect. Admittedly, they haven't had the desired effect (which is compliance with the court's ruling) yet, but they are effective in bleeding (and thereby penalizing) Microsoft.
  • by larkost ( 79011 ) on Wednesday July 12, 2006 @10:00AM (#15704960)
    Just a note: You cannot be convicted of having a monopoly... that is not against the law. And it is up to a judge to simply find that you have a monopoly that can happen during a trial and is not a big deal. What is against the law, and Microsoft has been convicted of both in the US and in Europe is that they illegally used that monopoly to hurt or prevent competitors.
  • by AnonymousDot ( 517935 ) on Wednesday July 12, 2006 @11:07AM (#15705515) Homepage
    Source: [] rence=MEMO/06/277&format=HTML&aged=0&language=EN&g uiLanguage=en []

    Competition: Commission Decision of 12 July 2006 to impose penalty payments on Microsoft - frequently asked questions

    What is Microsoft required to do?
    The European Commission's Decision of March 2004 required that Microsoft take various steps to put an end to its illegal and anti-competitive conduct (see IP/04/382 and MEMO/04/70). These included obligations to:

    1. supply complete and accurate interface information which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers; and
    2. make that information available on reasonable terms.

    On 10 November 2005, the Commission warned Microsoft, pursuant to Article 24(1) of Regulation 1/2003, that should Microsoft not comply with these obligations by 15 December 2005, it would face a daily penalty payment of up to 2 million (see IP/05/1695). Article 24 of Regulation 1/2003 entitles the Commission to impose such penalty payments not exceeding 5% of average daily turnover in the preceding business year per calendar day to compel companies to put an end to infringements of EC Treaty anti-trust rules, where an infringement has been established by a previous Commission anti-trust decision.

    Why has the Commission levied a penalty payment for non-compliance on only the failure to provide interoperability information, and not the terms on which that information is provided (i.e. the first and not the second of the two points from the 10th November 2005 Article 24(1) Decision)?
    As regards the provision of information on reasonable terms, Microsoft has announced that it will review the pricing of its protocols once revised technical documentation has been submitted. Furthermore, a final assessment on the degree of innovation, if any, that is contained in the interoperability information, and hence the reasonableness of the royalties that Microsoft charges, can only be made once the technical documentation embodying that interoperability information is complete and accurate.

    Why has the Commission decided that the fine levied should be 1.5 million per day?
    Of the two elements of non-compliance identified in the Article 24(1) Decision, complete and accurate interoperability information is a prerequisite for interoperable work group server operating systems to be developed. Microsoft's non-compliance in this regard has eliminated the effectiveness of the remedy. Consequently, the Commission has taken the view that failure to comply in this respect should at this stage constitute a larger part of the daily penalty payment identified in the Article 24(1) Decision of 10 November 2005.

    Why has the Commission taken today's Decision given that Microsoft is in the process of preparing revised technical documentation?
    Microsoft's obligation was to comply with the March 2004 decision's requirement to make available the relevant technical documentation as of June 2004. As of 20th June 2006, Microsoft had not done that, and the Commission decided that it was appropriate to levy a fine on Microsoft for its non-compliance so far.
    More than two years after the 2004 Decision, the Commission has therefore been obliged to resort to formal measures to ensure compliance. If any revised documentation that Microsoft submits proved to be complete and accurate, then Microsoft would not be subject to further daily penalty payments from the date on which complete and accurate technical documentation was provided. This would be the best outcome. However, if Microsoft continued t

  • by rbarreira ( 836272 ) on Wednesday July 12, 2006 @11:13AM (#15705561) Homepage
    At least give credit where it's due! [] And don't try to pass it as a true court transcript or whatever...
  • by hkl387 ( 565152 ) on Wednesday July 12, 2006 @11:25AM (#15705669)
    The Free Software Foundation Europe, who has been supporting the European Commission from the start, has launched a press release [] on the EC's decision.
  • Re:So what? (Score:3, Informative)

    by Some Bitch ( 645438 ) on Wednesday July 12, 2006 @12:30PM (#15706154)
    Form a group with your fellow 2nd world countries.

    What do the former Warsaw Pact countries have to do with this?

    First world = NATO (roughly).

    Second world = Warsaw Pact (again, roughly).

    Third world = countries no-one really cared about at the time.

  • Re:No, they couldn't (Score:3, Informative)

    by 99BottlesOfBeerInMyF ( 813746 ) on Wednesday July 12, 2006 @12:46PM (#15706251)

    The parent isn't insightful, it's simply wrong. Under WIPO treaties, to which pretty much every major economic power in Europe is a signatory, the EU can do no such thing.

    Actually, it is you who is completely wrong. Both the EU and the US have under numerous cases confiscated intellectual property rights as well as other assets from convicted criminals. Now the fact that these rights are worth a lot of money and the company is based in the US makes a difference politically, but not legally. In fact, according to the WIPO traty the US would be the one bound to respect the EU's confiscation of those intellectual property rights.

  • Re:Double Standard (Score:3, Informative)

    by 99BottlesOfBeerInMyF ( 813746 ) on Wednesday July 12, 2006 @01:14PM (#15706423)

    The difference is that you can't uninstall MS software when it's bundled with Windows.

    You are incorrect. The difference is MS is bundling products with a monopolized product while Apple is not (probably). I say probably because if Apple is found to have a monopoly on portable music players (they have 70% or so now) then it is illegal for them to bundle other products with it (iTunes). Of course several courts are now investigating this issue. Apple and MS are both held to the same standard, most people are failing to understand what that standard is.

  • by rs232 ( 849320 ) on Wednesday July 12, 2006 @02:09PM (#15706880)
    .. or watch out MS.Astroturfers on board ..

    "The reason the fine is less than what had been threatened in the press"

    Can you provide any citation from the commision to a reduction in fine for good behavour. There is a December reference to a $2m per day from the Commision. Which if my arithmetic is correct, is one million less then the current fine.

    "Microsoft met with the EU Trustee Neil Barrett, who "clarified the requirements for the documents"."

    Microsoft were compelled to 'meet' Barrett as they failed to comply with its ruling. What he actually said was the documents were "totally unfit for its intended purpose" [].

    You put that as if MS was the concerned party somehow trying to play honest broker to the nasty Commision. In fact MS were compelled to 'meet' Neil Barrett after they first tried to have him removed []. You see the Commision is a legally conviened body in judgement of Microsofts' misconduct. It's not as if the guilty party gets to 'meet' the Judge and 'clarify' things for him.

    "Barrett also provided Microsoft with "aggressive series of deadlines" for providing the documentation in accordance with the clarified requirements."

    So its the Commision who's at fault for not clarifying requirments. Instead of what is really happening, MS wilfully ignoring the instruction to open the protocols to third party developers.

    "Since that time, Microsoft has been working overtime to provide the documentation,"

    If they are complient why are they being fined $357m and a further $3m euros per day?

    "Microsoft has met all milestones in the "series of deadlines" laid down by Barret"

    If they are complient why are they being fined $357m and a further $3m euros per day?

    "the EU knows that Microsoft provided the new documentation in good faith, and they'll just work with Microsoft to address any further deficiencies."

    If Microsoft provided the new documentation in good faith why are they being fined $3 million per day.

    Why does the Commision need to 'work with Microsoft'? Did Leona Helmsley [] get to 'work' with the Judge when she was caught cheeting on taxes?

    In real life, are you a PR hack for Microsoft?

    Is slashdot becoming totally overrun with MS.Astroturfers?
  • by kylef ( 196302 ) on Wednesday July 12, 2006 @06:07PM (#15708841)
    Don't forget, this is a court-ordered fine - a punishment - upheld after an appeal.

    No, this fine has absolutely NOT been appealed yet. This is a NEW (additional) fine imposed after the Comission declared noncompliance with the 2nd half of the original 2004 ruling. You can bet that Microsoft will absolutely appeal this fine, especially if they really did have 300 full-time employees working on compliance for the past 6 months, and the original "non-compliance" feedback for this documentation was not delivered until September 2005.

    Dr. Barrett has actually stated that he is pleased with the documentation he has seen from this task force. His testimony could bolster Microsoft's appeal about compliance regarding this fine. If you aren't happy with a result, you absolutely must give the entity enough time to correct the perceived problem. Microsoft is doing this, to the independent auditor's satisfaction. Fining them now is like telling a criminal to shape up, and just as they start to obey, you throw them in jail anyway.

"I think trash is the most important manifestation of culture we have in my lifetime." - Johnny Legend