It's petty cash! Why not ban them from selling their stuff for a couple of years?

C'a l'air d'être beaucoup, mais pour Microsoft c'est deux fois rien! Pourquoi pas faire l'interdiction de vente pendant 1 an ou deux?

February 27, 2008 3:56 AM PST

EU slaps Microsoft with $1.35 billion fine

Posted by Mike Ricciuti | 45 comments

This post was updated at 7:28 a.m. PST, with additional reporting provided by CNET News.com's Dawn Kawamoto.

European Union regulators on Wednesday fined Microsoft a record 899 million euros, or $1.35 billion, for failing to comply with sanctions.

The fine specifically addresses sanctions over the pricing structure Microsoft had set for licensing of its interoperability protocols and patents.

The pricing issue is the last of three parts of the Commission's historic March 2004 antitrust order, which called for the software giant to comply to provide complete and accurate interoperability information to rivals so their software could work with the Windows operating system, as well as to license the information "under reasonable and nondiscriminatory" terms.

"We always knew the possibility of a fine (over the licensing fee structure) was always there, but no one knew when it would come, or how big it would be," said a source familiar with Microsoft's thinking. "Now the other boot has dropped."

In July 2006, the Commission fined Microsoft an additional 280.5 million euros, or $418 million, for failing to comply with the other two parts of its sanctions, on providing complete and accurate interoperability protocol information to rivals. That order was upheld by the European Court of First Instance last year.

In addition to the two fines for failure to comply with the March 2004 order, Microsoft was also hit with a $613 million levy by the Commission for having abused its dominant market position at the time of that order.

Neelie Kroes

The fine announced Wednesday is the largest ever imposed by the EU upon a single company. In total, the European regulators have fined Microsoft roughly $2.5 billion in the long-running antitrust dispute.

"Microsoft was the first company in 50 years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision. I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance with the Commission's March 2004 decision," EU Competition Commissioner Neelie Kroes said in a statement.

The ruling comes just one week after Microsoft announced a broad interoperability strategy, which included a pledge to not sue open-source developers.

"As we demonstrated last week with our new interoperability principles and specific actions to increase the openness of our products, we are focusing on steps that will improve things for the future," Microsoft said in a statement.

Although Microsoft's announcement and the Commission's fine come within days of each other, one source said the two were not related. That announcement addressed how the software maker would apply the Court of First Instance's ruling, or principles of law, to the rest of its business, according to the source.

In its order, the Commission specifically said that Microsoft had charged "unreasonable prices for access to interface documentation for work group servers."

According to the EU's ruling, Microsoft initially had demanded a royalty rate of 3.87 percent of a licensee's product revenues for a patent license and a rate of 2.98 percent for a license giving access to the secret interoperability information. In May 2007, following complaints by the Commission, Microsoft reduced its royalty rates to 0.7 percent for a patent license and 0.5 percent for an information license within the EU. Worldwide rates remained unchanged.

On October 22, 2007, Microsoft began providing a license that gives access to the interoperability information for a flat fee of 10,000 euros and an optional worldwide patent license for a reduced royalty of 0.4 percent of licensees' product revenues, the Commission said.

Update: Wednesday, Feb. 27, at 7:40 a.m.

Microsoft's competitors and adversaries also weighed in, following the Commission's announcement.

The European Committee for Interoperable Systems (ECIS) applauded the move by Commissioner Kroes.

"Commissioner Kroes is to be commended for her perseverance over the last three years in the face of Microsoft's footdragging and appeals to the Court of First Instance," Thomas Vinje, ECIS legal counsel, said in a statement.

ECIS, which is comprised of Microsoft rivals Oracle, RealNetworks, Sun Microsystems, IBM and others, further characterized Microsoft as taking a preferential route of paying anti-trust fines, than allowing "merit-based competition" to occur in the marketplace.

Last month, the Commission announced it was initiating a formal investigation into Microsoft, focusing on potential anti-trust violations regarding bundling of its products to its dominant operating system.

Browser maker Opera Software had initiated a complaint to the Commission, alleging Microsoft was violating anti-trust laws by tying its Internet Explorer to its Windows operating system. Opera highlighted concerns that Microsoft was adding new proprietary technologies into its browser that diminished interoperability with open Internet standards.

As part of its investigation, the Commission noted it would also investigate a complaint by ECIS.

ECIS filed a complaint alleging Microsoft refused to disclose interoperability information for a broad range of its products, including its Office suite, server-related products and its .Net framework.

Since the Commission announced it new investigation, Microsoft is not aware of other activities underfoot, said a source familiar with Microsoft.