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EU fines Microsoft record $1.3 billion
2008-02-27
The European Union fined Microsoft Corp. a record $1.3 billion Wednesday for the amount it charges rivals for software information. EU regulators said the company charged "unreasonable prices" until last October to software developers who wanted to make products compatible with the Windows desktop operating system. The fine is the largest ever for a single company and brings to just under $2.5 billion the amount the EU has demanded Microsoft pay in a long-running antitrust dispute. Microsoft immediately said the issues for which it was fined have been resolved and the company was making its products more open. The fine comes less that a week after Microsoft said it would share more information about its products and technology in an effort to make it work better with rivals' software and meet the demands of antitrust regulators in Europe. But EU Competition Commissioner Neelie Kroes remained skeptical and said Microsoft was under investigation in two additional cases. "Talk is cheap," Kroes said. "Flouting the rules is expensive." Microsoft's actions have stifled innovation and affected millions of people around the world, Kroes said. She called the record 899 million euro fine "a reasonable response to a series of quite unreasonable actions." "We could have gone as high as 1.5 billion euros ($2.23 billion)," she said. "The maximum amount is higher than what we did at the end of the day." Microsoft fought hard against a March 2004 decision that led to a 497 million euro ($613 million) fine and an order that the software maker share interoperability information with rivals within 120 days. The company lost its appeal in that case in September. Microsoft was fined $357 million in July 2006 for failing to obey that order. The EU alleged that Microsoft withheld crucial interoperability information for desktop PC software -- where it is the world's leading supplier -- in an effort squeeze into a new market and damage rivals. The company delayed compliance for three years, the EU said, only making changes in October to the patent licenses for companies that need data to create software that works with Microsoft. Microsoft had initially set a royalty rate of 3.87 percent of a licensee's product revenues for patents and demanded that companies looking for communication information -- which it said was highly secret -- pay 2.98 percent of their products' revenues. The EU complained last March that the rates were unfair. Under threat of fines, Microsoft two months later reduced the patent rate to 0.7 percent and the information license to 0.5 percent -- but only in Europe, leaving the worldwide rates unchanged. The EU's Court of First Instance ruling that upheld regulators' views changed the company's mind again in October when it offered a new license for interoperability information for a flat fee of 10,000 euros ($14,900) and an optional worldwide patent license for a reduced royalty of 0.4 percent.
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