Print 92 comment(s) - last by Phoenix7.. on Mar 10 at 8:41 PM

EU's continues to milk its favorite cash cow

How much does "whoops" cost?  If you're Microsoft Corp. (MSFT) the answer is $731M USD.

The EU pummeled Microsoft this week with a €561M fine for defying its browser selection edict, which called for special features to be added to versions of Windows sold in the European Union.  

Comments the EU:

The European Commission has imposed a €561 million fine on Microsoft for failing to comply with its commitments to offer users a browser choice screen enabling them to easily choose their preferred web browser. In 2009, the Commission had made these commitments legally binding on Microsoft until 2014 (see IP/09/1941). In today's decision, the Commission finds that Microsoft failed to roll out the browser choice screen with its Windows 7 Service Pack 1 from May 2011 until July 2012. 15 million Windows users in the EU therefore did not see the choice screen during this period. Microsoft has acknowledged that the choice screen was not displayed during that time.

The fine brings the Commission's total looting of Microsoft on antitrust violations to around $2.8B USD.  Microsoft's latest violation traces back in 2009, during the launch of Windows 7.  At the time, Microsoft held a dominant position in the browser market thanks to its bundling of its Internet Explorer (IE) browser with its market-leading operating system.

Rival browser makers complained and the EU sided with them, mandating Microsoft to supply a "ballot" screen allowing users to pick between IE and third-party browsers like Google Inc.'s (GOOG) Chrome or Mozilla's Firefox.

Steve Ballmer w Windows 8
Microsoft is facing more big fines for breaking the EU's rules. [Image Source: AFP]

And the approach worked.  It appeared that the most powerful thing driving Microsoft's market share was inertia; most users simply never bothered to download or try other browsers, sticking with the one that was built in.  Once they were presented with a choice, they jumped ship from IE.

Microsoft clearly wasn't happy with this, but it promised to comply with the EU ruling.

Then in May 2011, it release Windows 7 Service Pack 1, which "accidentally" removed the browser selection screen due to a "coding error".  Despite multiple warnings from the EU, Microsoft didn't bother to fix this little "whoops" until over a year had gone past.  As a result the EU opened new proceedings, which culminated with this week's massive fine.

Today Microsoft is in third place in the PC browser market with only about 24 percent of the market, behind Google 35 percent and Mozilla's 29 percent.  But the EU argues vigorous enforcement must continue in order to prevent Microsoft from repeating history and gaining a dominant market position through anticompetitive tactics.

One apparent flaw in the EUs logic, though, is that the antitrust regulators fail to hold mobile operating system makers like Google or Apple, Inc. (AAPL) to a similar standard.  Apple -- whose iPad tablet accounts for the majority of tablet sales -- and Android -- who accounts for the majority of smartphone sales -- both only package their devices with their own proprietary built in browser.  The question remains -- how is that monopoly-promoted bundling any different than what Microsoft did?  

Opera Mmini
Smartphone market leader Google has not been required to provide a browser ballot to phone subscribers by the EU.

But for better or worse the EU appears content to make Microsoft its whipping boy. Microsoft will likely appeal the fine, but past appeals have largely failed.

For now Microsoft's tone was largely apologetic.  In a statement it comments, "We have apologized for [the error].  We provided the Commission with a complete and candid assessment of the situation, and we have taken steps to strengthen our software development and other processes to help avoid this mistake - or anything similar - in the future."

Sources: Europa [EU press releases], Reuters [Microsoft response]

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

Microsoft choices
By siliconvideo on 3/6/2013 5:49:57 PM , Rating: 5
Microsoft has a couple of choices here

1) Completely abandon the EU no more Windows licenses, upgrades, patches, or any software like Word. This mean no more laptops with windows or Win phones. Let the EU stew in the mess they've created because people are too stupid to understand that there are multiple browsers available. Let's see them run their businesses on Linux

2) Charge an extra $50 per license, upgrade or software package to cover the cost of this pay off. Lets see how long it takes the Europeans to pay off the $2.8 billion in fines. Just mark it as a cost of doing business in Europe.

I prefer the nuclear option 1. It's about time these petty politicians understand what they are doing hurts the people they're suppose to help and not to placate their buddies in the other browser companies.

RE: Microsoft choices
By FITCamaro on 3/6/2013 5:59:43 PM , Rating: 2
Agreed. Send a message that they're tired of being held to higher standards than the rest of the market. PCs are becoming a smaller part of people's digital experiences in favor of smartphones and tablets. Yet no other ecosystem requires browser selection choices on first use. As they shouldn't. But neither should Microsoft. Bundling a browser with an OS makes sense.

RE: Microsoft choices
By augiem on 3/6/2013 6:36:29 PM , Rating: 2
I want to see Microsoft declare war on the EU. Get some insiders in government offices or pay off gov't employees to report piracy of Windows and Office inside the EU and then sue them for each infraction and if possible find a way to invalidate any legit licenses they do have. Force the government to use Ubuntu and see how they get along. Sadly it won't happen.

I would also really like to see #1 happen, but it's not realistic. If they did pull out of Europe, some big company would quickly swoop in and slap together some slick-skinned Linux-based alternative OS to fill the void, which would quickly gain dominance since no new PCs with Windows would be sold anymore, and would ultimately really hurt MS in the long run should its influence spread further than Europe.

RE: Microsoft choices
By A11 on 3/6/2013 8:42:29 PM , Rating: 5
I'm sure the MS stockholders would love to have a brilliant guy like you running their company.

Hint; You might want to do some research on how much MS sells for in Europe, the fines are peanuts.

RE: Microsoft choices
By marvdmartian on 3/7/2013 9:54:47 AM , Rating: 2
Agreed. Why continue to reward the ignorance/stupidity of the consumer? I still remember complaining about IE, back in 1997, and being fortunate enough to have someone suggest Netscape to me. Are Europeans just not nice enough to do this for others??

I wonder what the cost to Microsoft would be, if they simply told the EU to stuff it, and go find their own browser to use? No more Windows releases there, no updating old releases, NOTHING.

RE: Microsoft choices
By Strunf on 3/7/13, Rating: 0
RE: Microsoft choices
By dastruch on 3/8/2013 7:07:22 AM , Rating: 2
Coming from the EU I totally agree with you.

"Well, we didn't have anyone in line that got shot waiting for our system." -- Nintendo of America Vice President Perrin Kaplan

Latest Headlines
Inspiron Laptops & 2-in-1 PCs
September 25, 2016, 9:00 AM
The Samsung Galaxy S7
September 14, 2016, 6:00 AM
Apple Watch 2 – Coming September 7th
September 3, 2016, 6:30 AM
Apple says “See you on the 7th.”
September 1, 2016, 6:30 AM

Most Popular ArticlesAre you ready for this ? HyperDrive Aircraft
September 24, 2016, 9:29 AM
Leaked – Samsung S8 is a Dream and a Dream 2
September 25, 2016, 8:00 AM
Inspiron Laptops & 2-in-1 PCs
September 25, 2016, 9:00 AM
Snapchat’s New Sunglasses are a Spectacle – No Pun Intended
September 24, 2016, 9:02 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki