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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 6:09:46 PM , Rating: -1
I do not believe in a completely free market, it does not work.

The rules for a mega corp do not translate to all businesses as your argument seems to imply.

The dominance of MS Windows was a priori established through abuse of their monopoly position. They used their small monopoly to become an even larger one.

When the EU declares every business should advertise their competition, I'll start seeing more of your POV.

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
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


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

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