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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 Keeir on 3/7/2013 1:47:37 PM , Rating: 2
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.

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

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

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.

"This is about the Internet.  Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis

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