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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]



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RE: Can We Stop?
By simsony on 3/6/2013 5:56:58 PM , Rating: -1
Straw man. Name calling.

Who's the moron?


RE: Can We Stop?
By Reclaimer77 on 3/6/2013 6:02:48 PM , Rating: 2
Sorry but my patience for this topis is beyond waned. At this point it's simple: if you agree with the EU on this, you're a retarded moron.

This is an entirely unsustainable business model. Forcing a company to advertise their competition AND provide a portal to those competing products. All on their dime! If you weren't biased, you would understand that.

Like most Europeans, you clearly don't own a business. If an entity demanded you do business this way, you would be the first to cry to the high heavens.


RE: Can We Stop?
By simsony on 3/6/13, Rating: -1
RE: Can We Stop?
By Reclaimer77 on 3/6/13, Rating: -1
RE: Can We Stop?
By mike66 on 3/6/2013 8:31:53 PM , Rating: 2
" they certainly haven't "abused" the browser market. "
Windows used to come with Netscape Navigator as it's default browser until MS decided to steal it. MS has never had an original idea. If IE is so good why won't MS code it for other OS platforms ? as the majority are open source that shouldn't be much of a problem. MS could have easily issued a patch, not without cost but certainly for many hundreds of millions less. Like any business if they operate within the rules of the market they wish to sell in then there is no problem,they chose to ignore that so they pay the price. I think they got of lightly.


RE: Can We Stop?
By inighthawki on 3/6/2013 8:41:51 PM , Rating: 2
quote:
If IE is so good why won't MS code it for other OS platforms ? as the majority are open source that shouldn't be much of a problem

What on Earth are you talking about? This is complete nonsense, Windows is based on an entirely proprietary code base, and IE uses a ton of proprietary tech. You complain that MS never innovates, yet IE was the first browser to support real hardware acceleration using Direct2D.

Also last I checked, shipping an OS with your own software isn't abusing anything. If I recall MS spent quite a few years where the competing browsers just completely blew them out of the water and did almost nothing to fix it (so much abuse of power!)


RE: Can We Stop?
By mike66 on 3/6/2013 9:42:05 PM , Rating: 2
" yet IE was the first browser to support real hardware acceleration using Direct2D .".

Actually Mozilla Firefox was the first , by the time MS starting demo'ing IE 9 with Direct2D, Firefox 3.7 was the first.
" IE uses a ton of proprietary tech " so it does not meet the international web standard when everybody else does! Way to sell that argument.


RE: Can We Stop?
By inighthawki on 3/6/2013 11:34:37 PM , Rating: 2
firefox did not support full hardware acceleration at the time, and in the initial realease was disabled by default.

Youre also clearly not a developer if you seriously don't understand the different between proprietary software technology and a standard. Open standards don't need to be implemented the same way. Microsoft uses direct for hardware acceleration, their own media foundation API for audio/video, and the Win32 API for all sorts of things. Porting it to another platform would mean the platform requires these APIs.


RE: Can We Stop?
By fxnick on 3/6/2013 10:27:44 PM , Rating: 2
Have we forgotten about IE for mac?


RE: Can We Stop?
By croc on 3/7/13, Rating: 0
RE: Can We Stop?
By JKflipflop98 on 3/6/2013 6:59:21 PM , Rating: 2
You should look up what the word "monopoly" actually means.


RE: Can We Stop?
By BZDTemp on 3/6/2013 7:47:20 PM , Rating: 1
You're the one that needs to do the reading. One can have market control without holding 100% of said market - even in the US Microsoft has been in court over them abusing their market position. (Look up Netscape vs. Microsoft).

Also all the nonsense about how the EU going after Microsoft for abusing it's market position was uncalled for because now Chrome and Firefox beat IE needs to stop. The situation would have been much different if Microsoft had been allowed to reign free - you forget that while there may not have been a browser ballot what goes on in the EU with it's ½ billion people influences what happens in the US.


RE: Can We Stop?
By inighthawki on 3/6/2013 8:22:18 PM , Rating: 2

mo·nop·o·ly

1.control of market supply: a situation in which one company controls an industry or is the only provider of a product or service
2.personal and exclusive possession: an exclusive right to have or do something
3.corporation with exclusive control: a company with a commercial monopoly


RE: Can We Stop?
By simsony on 3/6/2013 6:04:55 PM , Rating: 2
I randomly googled this and IE still dominates in America.

http://gs.statcounter.com/#browser-US-monthly-2012...

http://gs.statcounter.com/#browser-eu-monthly-2012...

Looks like the browser choice thing is making a difference?

Seriously what would you call yourself now?


RE: Can We Stop?
By Reclaimer77 on 3/6/13, Rating: 0
RE: Can We Stop?
By simsony on 3/6/2013 6:29:11 PM , Rating: 2
You are choosing to ignore my points. You are deflecting it with other topics, not addressing the points I am making, even though I've responded to yours.

You went into the reason for the judgement, competition, etc. Your rebuttal is so what? Really??

Fine forget everything else.

The simple matter is MS broke the law. That's it.

Fight in court if you arent happy. Go out in the open arguing why the law should change. Get other companies and the public to back you. Get some ad campaigns out if you think you're right. A cheapo viral campaign even.

Till then, you obey the law. Period.


RE: Can We Stop?
By Reclaimer77 on 3/6/2013 6:38:36 PM , Rating: 2
Well saying "it's the law" isn't really a point. Do you actually mean to squash all debate by hiding behind "the law"? Pathetic.

Laws are not absolute constructs. They can be discussed, debated, even questioned. If you don't like it, this isn't the place for you.

I will not allow you to simply state something is law, game over. No I don't think so. That's not "it".


RE: Can We Stop?
By simsony on 3/6/2013 6:52:55 PM , Rating: 1
That IS my point.

That's the purpose of this fine. To remind MS to obey the law.

It's obvious you have no understanding of whats going on, with your Google/Bing rhetoric. It's also obvious you don't want to debate, just hide behind name calling.

I'm sorry but I think that's pathetic.

You're wasting my time.


RE: Can We Stop?
By Reclaimer77 on 3/6/13, Rating: 0
RE: Can We Stop?
By futrtrubl on 3/6/2013 10:49:15 PM , Rating: 2
As far as I can see Apple has a 55% market share in tablets (world http://www.abiresearch.com/press/apple-maintains-l... , can't find Europe specific stats). Also according to that their market share high was 14% higher ie 69%. Compare with the 90% market share Windows had at the time.
And that's cherry picking Apple's strongest segment. Add phones to that making the ultra-mobile segment and its market share drops to less than 50%, add laptops making it a mobile segment and it falls even further.
This is about using you monopoly position in the OS market to create a monopoly position in the browser market. It's fine to BE a monopoly, as long as you get there through competitive means and don't abuse that position.
Apple doesn't have that position to abuse.


RE: Can We Stop?
By drlumen on 3/7/2013 12:37:31 PM , Rating: 2
The "laws" in this instance is the fact they they ignored a government agency mandate and got fined.

This particular fine has nothing really to do with the original mandate/fine. This fine was for MS not abiding by the mandate - regardless of your position on the initial fine.

While I don't like the fact the that EU can just jump up and make arbitrary business restrictions and fines, M$ accepted these risks for doing business in the EU. They have problems with it now but so what? M$ accepted the risk, got fined for their behavior (part of the fine was the change to the ballot system) and they ignored or were incompetent to abide by the ballot rule so this fine is their own fault.


RE: Can We Stop?
By KCjoker on 3/6/2013 6:50:28 PM , Rating: 2
What if the law is flat out dumb? A Gov't should NEVER force a company to prop up a rival company. If the EU felt MS used it's monopoly unlawfully to dominate the browser market they should have given them a bigger fine then. Or even not allow MS to operate in the EU. However to continually fine them is just an abuse of power. It's also an abuse of power to force a company to promote it's competition. The EU is so blatantly wrong for this it's actually making me defend MS...think about that and realize how bad the EU is.


RE: Can We Stop?
By simsony on 3/6/2013 7:06:54 PM , Rating: 1
Are you guys reading the article? This is because of defying a previous ruling. For 15 months. In spite of warnings and cautions.

MS forced European PC manufacturers to NOT install another browser, if they wanted Windows. MS has no right to dictate what a customer should choose. They are free to offer their products, price it as they wish, (IE is free), they CANNOT restrict the take-up of competitor products, no favoured nation clauses. Make your own PCs if you want that much control.

A ruling was passed to offer the choice as the damage was done. Such a thing is hard to quantify later, so providing the choice that was "taken away" was deemed the most suitable way forward to alleviate the market distortion.

Then MS complies with the ruling with XP and Vista, and ignores it for Windows 7. They were reminded again, warned. For 15 months they ignored. Code that was already written for Vista!!


RE: Can We Stop?
By Reclaimer77 on 3/6/2013 7:18:04 PM , Rating: 2
quote:
MS forced European PC manufacturers to NOT install another browser, if they wanted Windows. MS has no right to dictate what a customer should choose.


Sounds like a breach of contract to me. Nothing sinister. PC manufacturers knowingly entered an agreement with Microsoft to do business, and obviously, installing third party browsers to Windows pre-sale was against the Microsoft terms of service.

Customer choice wasn't affected at all. After a PC is purchased, someone can install anything they want to it. Correct?

But, just curious, how exactly could Microsoft "force" PC manufacturers in Europe to do something? Perhaps 'force' was too strong a word.

Got any links to back up these claims by the way?


RE: Can We Stop?
By simsony on 3/6/2013 7:34:36 PM , Rating: 2
Nah I'm done. As far as I'm concerned you know shit all about what has transpired. You're just making some sort opinions out of other opinions.

The end game for you is to concoct some story about how the EU is attacking American capitalism. Anything less wont do.

I can start explaining why iTunes, Apple Safari,Bing etc don't matter, and why google Ads might, but you simply haven't got the open mindset to understand what the problem is.

Go use Google and read up. I checked your browser stats and found it was shite.


RE: Can We Stop?
By Reclaimer77 on 3/6/13, Rating: -1
RE: Can We Stop?
By simsony on 3/6/2013 7:46:55 PM , Rating: 2
Just before you sleep, you're a republican right?

I'll understand American TV so much better if you are!


RE: Can We Stop?
By Reclaimer77 on 3/6/2013 7:53:57 PM , Rating: 2
No, I'm a Conservative. I believe in minimal Government, liberties and freedom, among other things.

And good luck understanding American TV, I've lived here all my life and I still don't.


RE: Can We Stop?
By vXv on 3/7/2013 8:31:49 AM , Rating: 2
quote:
No, I'm a Conservative . I believe in minimal Government, liberties and freedom , among other things.


This is a contradiction most conservatives try to limit others freedoms based on religion and other nonsense. (There are enough examples to find, go google).


RE: Can We Stop?
By BZDTemp on 3/6/2013 8:07:04 PM , Rating: 2
quote:
But, just curious, how exactly could Microsoft "force" PC manufacturers in Europe to do something? Perhaps 'force' was too strong a word.


I'm sure you could find this out for yourself but let me help you. The customers want Windows so a PC maker could either chose to do what Microsoft demanded or see their customers become ex-customers.

BTW. Microsoft is having a bad week. Denmark is taking them for $1 billion in tax due to some to smart tax evasion scheme in which Microsoft did not follow the rules and tried to put a lot of profit into a tax heaven rather than pay the local taxes in Denmark (the largest Microsoft development site outside the US is in Denmark).


RE: Can We Stop?
By Reclaimer77 on 3/6/2013 10:52:33 PM , Rating: 1
quote:
The customers want Windows so a PC maker could either chose to do what Microsoft demanded or see their customers become ex-customers.


So again, you aren't forced. You have a choice. You can use Windows, or try and sell Linux computers or something.

I'm so sick of this anti-business mindset on here. Microsoft can't be blamed for it's own success, and it shouldn't necessarily have to be a victim to it. If you don't like the way Microsoft does things, you can go somewhere else. It's that simple.

But that's not "fair". So we cook up a bunch of BS laws and regulations. Makes me sick.

Also you need to learn the art of the "rhetorical question". I ask a lot of questions in my arguments, not because I'm a dumbass, but because I'm trying to promote thought.


RE: Can We Stop?
By BZDTemp on 3/7/2013 12:36:53 PM , Rating: 2
What makes you think I really thought you needed the question answered? I was mocking you which should be oblivious :-)

It seems to me that you want a totally unregulated market but how you can do that is beyond me. If Microsoft had been allowed to run free there would be no Apple, IE alternatives would be crippled, Windows Media Player would be the only player and Microsoft would get a cut in every piece of media sold and that is just naming a few consequences.

In no is being anti monopoly the same as being anti-business in fact it is the opposite. By ensuring there is real competition it is ensured that new businesses get to come to life and that new ideas is coming to life. Without real competition everything slows to a crawl.


RE: Can We Stop?
By Tony Swash on 3/6/13, Rating: 0
RE: Can We Stop?
By Spuke on 3/6/2013 6:59:04 PM , Rating: 5
quote:
Reclaimer è la prova vivente che l'intelligenza artificiale non può competere con la stupidità naturale.
Dice il ragazzo che sostiene ciecamente Apple.


RE: Can We Stop?
By Demoure on 3/7/2013 11:59:27 AM , Rating: 2
?????????!


RE: Can We Stop?
By Demoure on 3/7/2013 12:00:55 PM , Rating: 2
weird, no japanese text support?


RE: Can We Stop?
By Keeir on 3/6/2013 8:07:43 PM , Rating: 3
Huh

Bad graphs my friend

From Q4 2008 (before EU ruling) to Today would be more interesting.

Europe
http://gs.statcounter.com/#browser-eu-quarterly-20...
IE Market Share Drop Percentage: -55.6%

(North) America
http://gs.statcounter.com/#browser-eu-quarterly-20...
IE Market Share Drop Percentage: -45%

US
http://gs.statcounter.com/#browser-US-quarterly-20...
IE Market Share Drop Percentage: -43.8%

Which is Reclaimer's (valid) point. Without fines and browser balloting most people are moving away from IE, -anyway-. The effect the ruling in the EU has is that around 10% of the European market does not use IE which otherwise might have used IE. (Even this is interesting because long before the EU ruling went into place, large numbers of EU users were transitioning away from IE on thier own.)

10% of the EU Internet market is around 50 million people. Microsoft has been fined about 14 dollars per person who might have been tricked... (Except weren't). Even if you assume the WHOLE 24% that use IE were "tricked" into using IE, that repersents 6 dollars per person.


RE: Can We Stop?
By Reclaimer77 on 3/6/2013 11:05:14 PM , Rating: 2
BOOM!!! Thank you, someone who gets what I'm saying. Not just trying to play 'gotcha'.


RE: Can We Stop?
By futrtrubl on 3/6/2013 11:08:13 PM , Rating: 2
That also assumes that the prop in Non-Europe IE usage is entirely independent of the ruling in Europe and/or the drop in IE usage within Europe due to the ballot system.
Almost no way to see how much effect it had, but I would find it odd if the advertising of the existence of other browsers by the high profile ruling and word of mouth advertising by new users of other browsers had no effect outside the EU.
This would have the effect of meaning that more than 10% would have used other browsers that otherwise would not have, so more than 50mil people, so less than $14/person of lost advertising revenue and other income for competing browser companies over the time period. Seems about right compared to the $10/person/year Facebook makes just on ad revenue.


RE: Can We Stop?
By simsony on 3/7/2013 3:03:29 AM , Rating: 2
Again, either you guys are missing the point or choosing to ignore it.

1) He/she said Chrome was bigger than IE in America. Not true.

2) You cannot take a data set and say hey there is some correlation. I can just as well argue that the ballot was necessary to correct European market specific distortion effectively, forces that were not seen in America? We both don't know either way, so that 10% figure is meaningless. All I know is that IE is still on top in the US.

but let's keep this simple. What is your answer to a company that broke the rules? Do you support this? Let them go free? This isn't the US where the worst punishment would be having to sponsor a presidential candidate for future favours.</sarcasm>

Somebody called it "terms of service". Reminds me of that South Park episode about Apple's T&C. Even your television satires this holy grail view of the Agree button.

It like there's one water company in a town that owns all the pipes, its too expensive for other companies to come because its a small town. so they won't give you water unless you take their electricity, Internet, mobile service and cable. So its no water but choice of services or water with no choice. Lets not even begin to talk about how that'd be priced. Ooh freedom! And you're actually supporting such an existence! Hey thats the terms of service for water!

It's laughably stupid to use some legal vehicle to distort the market and say it's ok. But then hey America, Apple, patents and lawyers, so all I can say is from an American mindset this is probably all very normal and the way to do it?

This from a country with capital punishment and gun ownership. You guys believe in punishment, but strangely not for large corporations?? This is the part I don't get.

It's as if you are supporting breaking the law. There wasn't a practical choice for PC manufacturers to not include Windows. The same goes for Intel/AMD. Handwringing customers into removing competition even by free market capitalist standards is wrong. Competition is the blood of functional capitalism.

You business owners seem to want any edge at any cost. ANY cost.

That's the lazy capitalist's answer to not competing with product quality and innovation in the open, undistorted free market. Only your product gets to talk. You are chosen only because you are the best. Not because of contracts and legal crap.


RE: Can We Stop?
By Reclaimer77 on 3/7/2013 9:01:49 AM , Rating: 2
What a rant!!

There can be no doubt now, I sensed as much from you last night. You hate America, think Microsoft is a representation of everything wrong with Capitalism, so that's why you support the EU in this. Your resentment toward my nation is pretty clear. You keep bringing nationalism into this.

quote:
It like there's one water company in a town that owns all the pipes, its too expensive for other companies to come because its a small town. so they won't give you water unless you take their electricity, Internet, mobile service and cable.


Right off the bat this is flawed. Again, Microsoft is NOT a monopoly. As long as OSX, Linux and others exist, this is a dead end.

And another thing, please stop pretending like payoffs and corruption in Government is ONLY an American thing. The EU is far from being beyond reproach in this area as well.

quote:
This from a country with capital punishment and gun ownership. You guys believe in punishment, but strangely not for large corporations?? This is the part I don't get.


Of course we do! Hello, don't you get it? "We" don't feel Microsoft did anything to warrant this punishment! Bundling a free browser with an OS is not a legitimate crime. And a punishment for this "crime" should never be to force MS to advertise and provide portals to competing products.

The EU has a long history of illogical filings against MS. Back in '07 they attempted to force MS to disclose proprietary server protocols. I suppose you support that too. They also attempted to force MS to release Windows with no bundled media player. How exactly is the consumer being best served by that exactly?


RE: Can We Stop?
By Keeir on 3/7/2013 1:47:37 PM , Rating: 2
quote:
That's the lazy capitalist's answer to not competing with product quality and innovation in the open, undistorted free market. Only your product gets to talk. You are chosen only because you are the best. Not because of contracts and legal crap.


Except in the EU where your product gets to be placed as a ballot option on the compeditors product.

If Microsoft was "breaking" a law by requiring volume resellers to not place a competing product along side thier product then fine. Punish them appropriately for the damages and move on.

I can't defend Microsoft from this second fine. They knew the rules and chose to ignore them. That's stupid, regardless of the sense of the rules.

But it doesn't change the fact the EU has taken this way too far. In the article it mentions only 15 million users could have been affected by the lapse of the balloting measure. A fine of ~50 dollars per license is -way to high-.

The fines and the "compliance" measures are outside the realm of reasonable punishment.

quote:
2) You cannot take a data set and say hey there is some correlation.


Hilarous. I am pretty sure thats just how things work!

http://en.wikipedia.org/wiki/Correlation_and_depen...

In both Europe and US there is a correlation of time and IE usage that is very similiar over the data range Q4 2008 and Q4 2012. This suggests (but does not in any way prove) that the "Balloting" measure is a minor impact on Interest Browser Choice. Significantly more datasets would be required to build enough correlations to suggest a definative enough link to transition to the "causation" area. For example, we really only have correlation studies to "prove" a number of popular medical connections, such as Tobacco and Lung Cancer. Or how about CO2 and global climate "change". That's really just correlation at this point, no causation and many people think trillions should be spent to reduce CO2.


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