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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 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 , 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.

"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone

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