E.U. fines Microsoft another €899M for antitrust abuse

by Paul Meller

February 27, 2008 —

The European Commission fined Microsoft a massive €899 million ($1.3 billion)
for continued failure to honor the 2004 antitrust ruling against it, Commissioner
for Competition Neelie Kroes said Wednesday.

Europe's top competition authority has already fined the company €777.5
million -- €497 million in the original ruling plus a further €280.5
million for noncompliance.

The latest punishment brings the total of fines to just under €1.7 billion
"for a clear disregard of its legal obligations," Kroes said in a
news conference.

"The Commission's latest fine is a reasonable response to unreasonable
actions by Microsoft," Kroes said.

Microsoft finally came into compliance with the 2004 ruling last October. Kroes
said the latest fine -- the biggest yet -- is for noncompliance up to Oct. 22,
2007.

The software giant has over the past four years repeatedly tried to avoid complying
with part of the Commission's ruling that ordered the company to detail communications
protocols used by its Windows server operating system so that other manufacturers
could build systems that interoperate smoothly with Windows.

The latest fine punishes Microsoft for failing to licence those protocols to
open source software developers at what the Commission views as a reasonable
price.

Microsoft said it is reviewing the Commission's action. "The Commission
announced in October 2007 that Microsoft was in full compliance with the 2004
decision, so these fines are about the past issues that have been resolved,"
it said in a statement. "We are focusing on steps that will improve things
for the future."

Anticipating new fines, the company announced last week that it will make its
biggest effort yet to help other companies make their products interoperate
with its most popular software, including Windows and the Office suite which
includes Word, Powerpoint and the Outlook e-mail program.

The Commission reacted with scepticism, pointing out that it had heard similar
promises before, and added that the move only addresses one of two new antitrust
probes into Microsoft's business practices, which were opened last month.

Both new cases build on the same legal arguments that underpinned the 2004
ruling: one looks into the company's failure to share essential interoperability
information in Office. The other is looking into whether the tying of Internet
Explorer to Windows amounts to an abuse of antitrust law.

The second case is based on the part of the 2004 ruling that dealt with the
tying -- or bundling -- of Media Player to Windows. Microsoft was ordered to
sell a second version of Windows with Media Player stripped out. The company
complied, but the remedy was deemed useless because the second version was sold
at the same price as the version bundled with a media player, and no one bought
it.

The size of the fine failed to impress some of those who had helped make the
case against Microsoft.

"That's not a fine, that's just a way of getting their attention,"
said Jeremy Allison, co-creator of the open-source workgroup file and print
server software Samba.

The communications protocols that the 2004 ruling forced Microsoft to disclose
will benefit projects like Samba. The developers of the current version of Samba,
which interoperates with servers and desktop PCs running Windows, were forced
to reverse-engineer the format of the messages Microsoft uses because documentation
was not publicly available.

Legal counsel to the Free Software Foundation Europe (FSFE) Carlos Piano also
said it's not about the fine.

"The most important achievement in this case is not the fine, it's not
the disclosure, it's the change in the law," he said, referring to the
way in which Microsoft was forced to disclose the protocols on license terms
friendly to open source software projects.

(With additional reporting by Peter Sayer in Geneva.)

IDG News Service