Back in September last year we wrote about how the European Court finally ruled on an antitrust case that was started back in 2004 against Microsoft. The ruling? Microsoft was fined $690 million dollars. For this particular fine, it was because the EU felt Microsoft needed to make a version of Windows without Media Player included. At that point, it was a record fine but now the EU is fining them again for a new record fine of $1.3 billion dollars. In all, Microsoft is expected to pay under $2.5 billion in fines.
According to the Associated Press, the issue this time is that EU regulators claim “the company charged “unreasonable prices” until last October to software developers who wanted to make products compatible with the Windows desktop operating system.” More specifically, the unreasonable prices were charged for access to “interface documentation for work group servers.” The fines this time are the result of “non-compliance” says the EU and they believe Microsoft is still restricting their competitors. Microsoft has said that those issues that they are being fined for have already been resolved so it looks as though Microsoft is going to have to do some fighting to prove their case.
So what are the “unreasonable prices” Microsoft is charging?
- Originally, Microsoft set the royalty rate at 3.87 percent of a licensee’s product revenues
- Companies wanting communication information were required to pay 2.98 percent of their products’ revenues
- At this point, Microsoft has lowered the patent rate to 0.8 percent (only in Europe)
- The Communication Information rate was lowered to 0.5 percent (only in Europe)
We don’t know all of the in’s and out’s regarding EU rules and regulations, but at this point it seems as though they are getting a little fine happy and going after Microsoft simply because they can. Or perhaps they’re just trying to make a point. Any thoughts? Did Microsoft deserve to have another fine slapped on them?
The european union cannot seem to stand the enormous amount of money that microsoft is making. They want a piece of the pie. I see absolutely no wrong with that. The EU is the modern day Robinhood. Trying to recover what has gone from their economy over to the US. Too bad us Asians are not that united. We could have formed an asian union and recovered twice that amount.
i’m european, italian more specifically. european union is great and i’m sure everybody is using GPL software. GPL what? yeah, maybe GNU/Linux? GNU what? yep…i thought it. it’s so easy to go against those who have success…and the freaking crazy laws in the european union are incredible. i thought communism or socialism was out…
Another fine for Microsoft is definite fine with me. MS is basically having a monopoly over the OS market. I do hope to see an Asian Union some day if it is a possibility.
At least Southeast Asia got united enough to come up with the Asean. Microsoft should really look into why the EU is fining them. The way they are sucking money out of everyone don’t goes well with me.
It’s amazing how little understanding people have of EU competition law…
The Commission is fining Microsoft for spending so long refusing to comply to their ruling. Unlike in US, the fact that Microsoft is now complying does not relieve them of responsibility for the period they spent refusing to comply.
For those who actually understand the concepts of competition and regulation, and the way they’re viewed by businesses, it’s not difficult to see that, in practice, the European approach is more effective.
I wonder what the EU would do if Microsoft pulled out of the European market. That would server the EU right as far as I am concerned.
And you think they’ll yet Microsoft buy Yahoo….
@Oropher:
You are absolutely right. Microsoft delayed compliance for three years, only making changes in October 2007 to the patent licenses for companies that need data to create software that works with Microsoft.
Microsoft’s lawyers thought they could get away without complying with the European Union’s regulations, but were caught and now have to pay for it. This is another example of Microsoft’s arrogance which is costing them a hard lesson and quite a few bucks.
If they want to do business in Europe, they have to play by their rules. Simple as that.
URL: [finance.myway.com]
Regards,
Omar.-
I’ll be the first to admit I don’t have much of an understanding of the EU competition law but it may be worth looking into if it’s something Microsoft is having such issues with.
That’s an interesting thought, and it actually crossed my mind. Microsoft would likely never do that though because then they will just be opening the doors for their competition.
Look at what happened in Japan it’s 50/50 between Macs’ and Windows’. Microsoft was too slow and left the door open for competition.
P.S. Jeez my comments are just not making sense today. You should let all stars edit there comment for a entire day.
It’s the european commission that has fined microsoft, not the european union. The European Commission (formally the Commission of the European Communities) is the executive branch of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union’s treaties and the general day-to-day running of the Union.[1] (wikipedia)
Microsoft has been fined as they have not complied with earlier rulings regarding providing ability for competitors to make their work group server products compatible with windows office pcs.
The following information from wikinews might give you some insight:
The European Union (EU) competitions commission has announced it’s decision to fine the Microsoft Corporation €899 million (US$1.35 billion), approximately 1/10th of the company’s gross yearly earnings, for failing to comply with the 2004 antitrust order. It is the highest ever fine charged by the EU (also being the largest fine of its kind ever imposed upon a company), and the first time that the EU has fined a company because of non-compliance with an antitrust decision.
The first decision in this antitrust case was given in 2004 citing that Microsoft withheld needed interoperability information from rival software companies which prevented them from making software compatible with Windows. The commission ordered Microsoft to provide this information. Microsoft agreed to this, providing the information for royalty fees of 6.5% of the licensee’s revenues for the product on grounds of innovation (specifically, 3.87% for the patent license and of 2.98% for the information license). The EU found these royalty fees unreasonable and Microsoft was ordered to lower them. Microsoft complied with this, adjusting the royalty rates to 1.2% (changing the rates for the licenses to 0.7% and 0.5%, respectively) in the European Union, while keeping the rate the same for the rest of the world. The EU still saw this as an unreasonable rate, and Microsoft, two month after lowering the rates, reduced the rates yet again to a flat rate of €10000 or a royalty of 0.4% applicable worldwide. Microsoft’s royalty rates, which were deemed unreasonable for the period of 15 months between June 21, 2006 and October 21, 2007 are the cause for the fine. So far, the EU has fined Microsoft €1.68 billion in 3 separate fines in this case. This fine will go towards the European Union annual budget.