EU Competition Commissioner Neelie Kroes
Big corporations beware: the European Union is playing high stakes

Like a plentiful oil well, the European Union (EU) has found, since 2004, that Microsoft is a rich source of funds.  The EU allowed Microsoft to continue to operate in the region, but found it in violation of antitrust laws.  Its conclusion -- in order to stay Microsoft will have to pay some big fines.

The Microsoft fines began in March of 2004 when a European Commission high court found the company guilty of antitrust violations -- in particular, using underhanded tactics to freeze out its competitors in the media player and server software markets.  A massive fine of $690M (€497M) was charged against Microsoft. 

Microsoft refused to comply and was promptly fined an additional $375.4M USD.  In the end, Microsoft’s decision to fight the law turned out to be a futile one when the European Court of First Instance ruled to uphold European Commission's decision against Microsoft.  Microsoft agreed to finally comply with the ruling.

Now Microsoft has been hit with another massive fine by the European Union. The EU says that between July 2006, and October 2007, Microsoft's refused to comply during its legal fight against the EU, making it eligible for the increased rate of fines of approximately $3.83M a day, for each day of non-compliance.  The new fine announced by the EU for this period sums up to
$1.4B USD (€899M). 

The fine marks the largest antitrust fine in international history, and a record judgment against Microsoft.

Microsoft indicated it is willing to accept the fine, though, commenting that the fines were about past issues and that the company is now operating under revised principles that make its software more open.  Microsoft twice reduced its patent rate and information license rate, last May.  Finally in October it reduced its rates even further, offering
new license for interoperability information for a flat fee of $14,000 and an optional worldwide patent license for a reduced royalty of 0.4%.  The October reduction appears to be satisfactory in the EU's eyes, though the initial reduction was not.

The changes in licensing policy went into effect on October 22, 2007.  The changes help make it easier for smaller software firms to gain access to interoperability information, allowing them to interface with Microsoft products.  Microsoft had initially demanded a royalty rate totaling 3.87% of a licensee's product revenues and demanded an additional 2.98% of products' revenues from companies seeking access to communications information, which Microsoft deemed highly secret.

While the over $2.4B USD in fines reaped by the EU against Microsoft since 2004 have certainly hurt, Microsoft still has about $19.6B USD in cash reserves, when taking the most recent $1.4B USD fine into effect.  Unfortunately for Microsoft, this may soon be shrinking further as the European recently launched two new investigations into Microsoft.

The EU is also keeping busy trying to squeeze on Intel, which it also accused of antitrust violations.  Intel, like Microsoft, fought the EU's accusations.  Meanwhile the EU was hard at work, strengthening their case, by seizing documents in a raid of German Intel offices.

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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