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European Union Slaps Record Fine on Microsoft

BY Admin  March 24, 2004 at 1:20 PM EST

The ruling from the European Commission, the executive arm of the European Union, found that the Redmond, Wash.-based company broke competition laws by failing to give rivals necessary information and by packaging its media player with its Windows operating system.

With the decision, “we simply ensure that anyone who develops new software has a fair opportunity to compete in the marketplace,” EU competition commissioner Mario Monti said following the vote, according to The Washington Post. “Our decision is about protecting consumer choice and stimulating innovation.”

Microsoft has said it will appeal the ruling, which is the culmination of a six-year investigation.

“We think that today’s decision is unfortunate, but we respect the commission’s decision and will now move forward with the appropriate steps in this process,” Brad Smith, Microsoft’s chief lawyer, told reporters. “Perhaps in the future we’ll be able to achieve a mutual resolution of these issues.”

The European Commission set a 90-day deadline for Microsoft to offer computer makers a second version of Windows for sale in Europe that doesn’t contain its software to play music and video clips, the Seattle Times reported. The company can also sell a version that does contain this capability.

Smith said that removing Microsoft’s media player would break other features in Windows, including access to Web sites with video designed to work with the player.

The commission also gave Microsoft 120 days to provide more information about Windows to rival companies developing servers, which connect personal computers to a network such as the Internet.

Regulators will appoint a “monitoring trustee” to ensure that Microsoft gives complete and accurate information about Windows to server makers and that the two versions of Windows perform equally as well, the commission said.

The $613 million fine is the largest imposed by the European Commission in an antitrust case but far below the maximum possible penalty of about $3.5 billion. With $10.15 billion in revenues in the quarter that ended Dec. 31 and $6.1 billion in cash and equivalents on hand, Microsoft would not be financially pressed to pay the fines, according to the Post.

The ruling goes further than the U.S. Department of Justice’s settlement with Microsoft in 2000 — widely viewed as lenient — stemming from accusations that Microsoft essentially crushed the Internet browser Netscape by including Internet Explorer in its Windows system.

The European Commission has been investigating Microsoft since 1998, when rival Sun Microsystems, based in Santa Clara, Calif., complained that Microsoft refused to release enough information for Sun to develop products that work with Windows-based computers.

In 2000, the commission expanded its investigation to include Microsoft’s bundling of its media software player with Windows.

More than 90 percent of the world’s computers use Windows.