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.