February 27, 2008

EU To Microsoft: Not Open Enough. Imposes $1.4 Billion Fine

Erick Schonfeld

67 comments »

Microsoft’s sudden conversion to openness and interoperability last week did not impress the European Commission. Today, the antitrust-enforcing arm of the European Union imposed a $1.35 billion fine (899 million Euros) on Microsoft for failing to comply with a 2004 order to supply interoperability data for its products to its competitors. That brings the total fine to $2.5 billion.

At a press conference EC commissioner Neelie Kroes said of Microsoft’s last-minute overture last week: “We don’t want talk, we want compliance. If you cheat the rules, you will be caught.” She also noted that was Microsoft’s fifth announcement about improving interoperability.

One thing is for sure, if Microsoft does not start acting sincerely in its interoperability efforts, the EC will just keep on zinging it with fines.

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SearcH◆ EngineS WEB

February 27th, 2008 at 8:07 am

The Cynical American business mindset versus The European Idealism
Olivier

February 27th, 2008 at 8:09 am

Wow, just imagine the interest on this fine…
When is MSFT due to pay the fine anyway? Can they keep appealing forever to delay payment?
I will know this is real when the EU actually confirms cash has been received or when the seize the cash from MSFT cold fingers.
Chris

February 27th, 2008 at 8:10 am

$1.3 billion is a good chunk of change. Ouch.
I Am Not Posting To Spam My Blog

February 27th, 2008 at 8:21 am

Anyone feeling a (not unjustifiable) instinct to cheer at this news might want to consider that the $1.4bn will be going to an even less deserving cause, if that were possible - propping up uncompetitive European agribusiness at the expense of the third world, with a healthy slice taken to keep the bureaucratic gravy train running.
Chris

February 27th, 2008 at 8:23 am

They totally deserve it. They don’t want other people to make software. They want to encroach on every single last little bit of software market no matter how small or insignificant, until they have wiped everyone out.

Collectively, we should never let up on Microsoft until they cease to exist.
Jason

February 27th, 2008 at 8:27 am

Chris, you are a moron.
Technicle

February 27th, 2008 at 8:28 am

China not doing this to Microsoft, for the record — to date.
Chris

February 27th, 2008 at 8:30 am

They even, unsuccessfully may I add, tried to usurp Linux. That’s what they do. They’re not team players. They’re not community members. They’re nasty, scary freakish nerds bent on world domination. Even if these fines aren’t fair, I’m glad society in general has made serious efforts to stop them.
old greeting card guy

February 27th, 2008 at 8:35 am

Describing MS as wanting to dominate while their competitors struggle I would guess describes most readers of TC who run businesses, so I don’t think they should be criticized for that. It’s capitalism, sheesh.

The real problem is that the free market system has shown it can malfunction when a monopoly exists - the real issue is how to handle that.

The Irony is that if MS made good on it’s promises to truly be more open it may be able to satisfy the EU, and actually enhance their business in the process. Some companies are wary of being customers specifically for the lack of openness, especially the developer community which is a strategic and influential group for them to win over.

MS has been doing business for so long under the same mode of thinking it’s difficult for them to perceive how some tactics are no longer effective.
Chris is a moron

February 27th, 2008 at 8:52 am

Chris, you are a moron. Please stay in Canada. No need to move back here.
Tom Corbin

February 27th, 2008 at 8:56 am

Why even pay it? The EU is trying to resurrect it’s inflation-laden economies with subsidies from Microsoft.
techie

February 27th, 2008 at 8:58 am

why always microsoft on target,where lotz of other companies sucks like anything
Brad Jashinsky

February 27th, 2008 at 8:58 am

Like them or not you have to give credit to Microsoft for creating an operating system platform that has allowed computers to become commonplace in homes and businesses. Not only that, but they allow anyone to write software or build hardware to run on that platform, and don’t cause licensing fees, etc. allowing for thousands of hardware/software businesses to emerge.

The EU’s fines do seem quite steep, but the biggest problem is that they do not give clear goals for Microsoft to accomplish to satisfy the EU’s requirements for openness. I doubt Microsoft will pay one penny as they have clear competitors, and even the biggest anti-Microsoft critics have to admit they have gotten much better in the last few years.
Todd

February 27th, 2008 at 8:58 am

I think we can all agree that they’ve crossed in to the realm of extortion, now.

At what point does it become not worth it anymore to try and be reasonable with the EU when all their ideas seem to be borderline communist?
Josh

February 27th, 2008 at 8:59 am

wow! thats the record fine.
What is going on, blog

February 27th, 2008 at 9:01 am

$1.3 billion? that seems to be a little too steep but with the length of time it takes for appeals it seems like Microsoft will have already integrated Yahoo into their online operations which also seems like it will take forever. http://www.whatisgoingonblog.com
Viktor

February 27th, 2008 at 9:02 am

Great job EU. I love that quote:
“We don’t want talk, we want compliance. If you cheat the rules, you will be caught.”

When will MS learn that their American way of delaying everything until everyone forgets what the issue was by sending their lawyers and lobbyist doesn’t work (hopefully) outside of the U.S.
AllHolyBooks.com

February 27th, 2008 at 9:07 am

Great job by EU.
But I don’t see US doing the same thing…
Chris

February 27th, 2008 at 9:11 am

@10, There’s no need to flame. I’m through paying 70% corporate tax and $5 a gallon for gas. Sorry. I’m not going through that for a life time.

Please stay on topic.
AC

February 27th, 2008 at 9:13 am

Obviously most people on this board have no clue of what this fine is about. Even after the 2004 fine, Microsoft still did not obey the EU laws, and they got fined for that again.
P.S. the fine money goes to the EU states. All that “propping up uncompetitive European agribusiness” without at least a link to back it up makes you a troll IMHO.
wraith808

February 27th, 2008 at 9:22 am

How much business comes from the EU to Microsoft? At some point, it seems like it would become better to just pull out than to pay this level of extortion. 1.35bn? Just because they make a lot, they fine them a lot?
Jurado

February 27th, 2008 at 9:25 am

Its extortion….EU and UN, what’s difference? Chris you are not a Moron, you are a Major Moron!
Tom Corbin

February 27th, 2008 at 9:29 am

There’s really no way to enforce it. The US won’t recognize this fine and ensure it’s payment. The only recourse is to prohibit sales of Microsoft products and services throughout the EU.

Talk about damaging the local economy.
Technicle

February 27th, 2008 at 9:33 am

EU vs. US, period.
greenski

February 27th, 2008 at 9:43 am

@Tom Corbin “There’s really no way to enforce it.” Are you really sure ? You think that Microsoft has no bank account throughout EU ? :-/

Review your worldwide economy manual.
direk

February 27th, 2008 at 9:55 am

if i was microsoft i would threaten to pull out my business in EU. let see how they cope up…
Tom Corbin

February 27th, 2008 at 10:00 am

@greenski EU bolsters its legitimacy by grandstanding on these issues. I would love to see attempt at enforcement and how that would impact the individual EU states thoughts on the matter.
Rajiv Singh

February 27th, 2008 at 10:02 am

I guess there are the French behind this. Cowards as always.

Btw Chris is a moron indeed.
ZiZi

February 27th, 2008 at 10:03 am

the most shocking part is 1.35 BILLION dollars now only makes a measly 899 million Euros!
We are fooked!
Matt S

February 27th, 2008 at 10:13 am

One has to wonder if there is any technology on the planet more thoroughly documented than Microsoft’s.

The EC can charge whatever it wants, by any decision-making process it sees fit, which should bother anyone who likes technology or any business. The EC are enriching their own bureaucracy; this is an arbitrary tax that works outside of any electoral system or even WTO rules.

The reason Microsoft is dominant is that people — European citizens — have chosen to buy it over other technologies. The EC sees that as a punishable offense.
Dan Sherman

February 27th, 2008 at 10:18 am

If I were MS, I’d pull my business from the EU tomorrow. Screw them and their socialism. One week of not offering any MS services or software in the EU would create a sudden change of heart in their petty little socialistic minds.

If MS has the wherewithal to deliver a product that puts someone else’s product out of business… them’s the brakes. Come up with a better product next time. Simple as that. Governments should be protecting you from foreign invaders, not trying to create a level playing field in business. Free enterprise will do that on its own.
Technicle

February 27th, 2008 at 10:23 am

Right, pull out from EU.
Morgan

February 27th, 2008 at 10:44 am

“We don’t want talk, we want compliance.”

That that quote isn’t seen as troubling, is, well, troubling. Is this Neelie person elected? Whatever, glad I’m not there.
EU citizen

February 27th, 2008 at 11:02 am

You american people teached us that monopoly is evil. Do you remember S.O. Standard Oil? http://en.wikipedia.org/wiki/Standard_Oil

“By 1890, Standard Oil controlled 88% of the refined oil flows in the United States. The state of Ohio successfully sued Standard, compelling the dissolution of the trust in 1892…On May 15, 1911, the US Supreme Court upheld the lower court judgment and declared the Standard Oil group to be an “unreasonable” monopoly under the Sherman Antitrust Act. It ordered Standard to break up into 34 independent companies with different boards of directors”

I am writing on a HP computer because I like HP computer, but I can still choose: Dell, IBM, Packard Bell, Acer, Samsung etc.

The SO is only Microsoft Vista. Is this right?

EU vs USA? what a stupid idea. We europeans and americans are the same people. We love the same movies and we love the same things. I have never been in USA but I know that US is a great country full of great people.

So please stop with this shit EU vs USA.
Rod

February 27th, 2008 at 11:04 am

So some portion of what I pay Microsoft may now go to the socialists in EU? Exactlyhow is that money going to be spent?
Chris

February 27th, 2008 at 11:10 am

@34

http://books.google.com/books?.....oF-HjjOkoI

Check out the last paragraph.
They’re not “like an alligator”. They said so after all.
All they do is make these “nice little software packages”.

With Linux and Mac where they are today, I don’t think there’s a compelling reason to use MS Windows anymore. To me and a lot of younger people Windows gives you the same feeling as using an Amiga.
Lahori

February 27th, 2008 at 11:10 am

they even get to get the largest fine. First the largest OS, now the largest fine; they are on a roll, guys, on a roll!!
Chris

February 27th, 2008 at 11:36 am

“Btw Chris is a moron indeed.”

http://digg.com/linux_unix/XBO.....rtag_motto

Yes, it’s not like MS will go to extreme lengths to make sure you never hear about alternatives after all. I know MS better than most people. Just reading through this blog you have no idea what anybody’s background is.
Chris

February 27th, 2008 at 11:37 am

BTW, very few if any clean words are banned on Live. Linux is one of them.
Ross

February 27th, 2008 at 11:51 am

Totally galling that the EU is able to fund a bloated, useless bureaucracy off the backs of U.S. companies.
Farhad

February 27th, 2008 at 11:56 am

The EU accounted for 247 million Internet connection in 2006, (before a whole bunch of countries from the East joined the EU). The current number is probably more than 300 million.

The US accounts for just about 200 million Internet connections.

Europe is therefore a MUCH bigger market than the USA, with much higher purchasing power. Microsoft would much sooner pull out of the USA than the EU or Asia.

So stop making daft comments about whether or not it is worth selling software to the EU. They don’t have a choice, unless they wish to lose their largest market.
Pandrogas

February 27th, 2008 at 11:56 am

I still find it funny how everyone classifies Microsoft as a monopoly just because of distribution. The whole reason we were afraid of monopolies in the first place was because they stifle competition buy either buying them or squashing them somehow. So maybe Microsoft has issues with Linux, have you seen how far Linux has come in the past few years?

The competition isn’t dead, they just aren’t as big. If Europe doesn’t like Microsoft, there are tons of alternatives. They could even be like China and write their own freaking OS for the government and schools if they have to.

If Microsoft was honestly killing all competition like an old-school monopoly, the US would probably dismantle the company. They almost did that a few years back, but it does seem like Microsoft has made pretty good strides since then. I guess it’s mostly perspective, but I can still startup a company without fear of the big blue giant stomping me.

The event is a political grandstand for the most part. The EU, like the UN, requires that it’s member all cooperate for this to ultimately work. So what are the odds of that?
Me_Today

February 27th, 2008 at 1:01 pm

They will just pass the cost. Their gross profit is 80%. They are a monopoly. So in the long run, it really sounds like a bigger deal than it really is, nothing really changes.
John

February 27th, 2008 at 1:28 pm

Every single one of you who says “Chris is a moron” was obviously born yesterday.

@Pandrogas: It’s not whether MS is successful or not at stifling the competition. It’s the fact that they are using their might to attempt to unfairly stifle competition.

I applaud the EU for standing firm where the US government “sold out”. We had a chance to do something about MS and failed.

If MS pulled out of Europe, it would be the death knell for MS. Linux (and Apple) would flood in .. and that would be the day that history would record as the day the computer revolution really began.
anon-guy

February 27th, 2008 at 1:43 pm

Thanks EU! If they pay, it’ll be passed on to us lowly consumers, so thanks for taking money right out of the pockets of your citizens.

Microsoft, should stop selling their product inside the EU district and see how quickly the EU changes their mind about imposing the fines.
Pandrogas

February 27th, 2008 at 2:03 pm

@44: John, where’s the proof that they are competing unfairly? We always hear about this crap “Oh Microsoft this and that”, I want see links and evidence that they obliterated the OS, Browser, or Media market. Not their market share number, I want proof that they are in fact a monopoly.
Eric Ogunbase

February 27th, 2008 at 2:15 pm

I wonder what would happen if Microsoft decided to cancel every European copy of their OS for just three days. If they just invalidated every copy of Windows and sent out a message that it was due to the EU’s interference.

I wonder how quickly that fine would be reversed.
Christofer

February 27th, 2008 at 2:56 pm

I’m surprised by the ignorance from most of you (probably US?) posters.

@47 Do you seriously think that would work?

One final question: Can you even point out Europe on a map?
yabatopia

February 27th, 2008 at 3:08 pm

@46: You can find the EC’s 2004 decision (and proof, if you wish) at http://ec.europa.eu/comm/compe.....792/en.pdf
Ryan W.

February 27th, 2008 at 3:15 pm

Holy crap, Chris. They don’t let you use the word Microsoft either on Xbox Live! Your argument sucks. Please go back to sunny Canada.

People these days are just pathetic. It’s not like Microsoft was just started yesterday, they WORKED just as hard as anybody else to make it to the top. Now that they are at the top they can do whatever the hell they want in my opinion. Go use Linux or Mac if you don’t like what Microsoft offers you. Sheesh.
Marzipan from Toledo

February 27th, 2008 at 3:17 pm

@48

Judging by this fine, Europe is now located right between DPRK and Vietnam.
Christofer

February 27th, 2008 at 3:30 pm

@51 Why shouldn’t they fine Microsoft for breaking the law when they fine european companies and countries when they break the law?
euroguy

February 27th, 2008 at 3:40 pm

As a european, I really don’t understand all these quite hateful sentiments from US citizens. Microsoft may be based in the US, but they are a multinational. Like it or not, around the world there are differences in culture, laws and trade. If I decide to go to the US I have to obey the rules of the US. I pay US taxes, pay less for gas and would not be allowed to drink alcohol was I under 18. Same goes for americans here, or asians.

To some extent, there is less room for multinationals like MS to move around in their market, in Europe. And that is a good thing. without some kind of regulation, capitalism will encourage companies to exploit whatever and whoever they can, kill competition and become a monopoly. That’s just the nature of the sytem.

If you really believe that giant companies like Microsoft should have free reign in their market, we will have monopolies and corporate fascism in 10 years. Enjoy.
Pandrogas

February 27th, 2008 at 4:03 pm

@49: I just read 15 pages of legal garbage to find out that Sun wanted it’s stuff to be treated as more than an external program. The whole interoperability monopoly charge in the UE is based on questionaires to third party companies and a history of anti-trust in the US.

Essentially, they’re suing Microsoft because Windows isn’t open source. Or at least that’s the gist of the start of that behemoth PDF.
4fourfreedom

February 27th, 2008 at 4:43 pm

Microsoft should just tell those idiots to f*** off. Don’t give them a dime. If they don’t want to use the software let them learn linux. ohh I forgot they tried that already and were too dumb to keep it running….
Pandrogas

February 27th, 2008 at 5:17 pm

After putting some more thought into this, I’ve come to the conclusion that it ultimately doesn’t matter. Yes, 1.3 Billion is a lot of money. Yes,Microsoft can probably pay it, though maybe some European workers will pay the price for it.

Does it matter win or lose? Probably not in the long run.

Does it matter who’s right or wrong? Not really, it’s too subjective.

I’ll tell you what can matter. If the EU takes the money and does some good with it.

For 1.3 Billion Dollars, they should be able to make their own open source OS for the various European governments, health care facilities, schools, and non-profits. Hell, make it available for everyone to enjoy, but be careful to put in good security measures. Include all the basics for people to use and let the standard out so that other companies can join in (even Microsoft).

For 1.3 Billion Dollars, they should be able to help the competition out, but form competition so as to not be using the letter of the law to defeat the spirit of the law.

Will that happen? I’ll give it a 50/50 shot since I’m an outside observer. You’re call Europe.
mobilekick.com

February 27th, 2008 at 5:24 pm

Exactly MS isn’t open source, and fining them for not being something they aren’t is absurd. It would be like fining a black person for not being white. What law is this even based on? Lawyers just make up numbers and rules and expect companies like us to follow. I dislike microsoft on a very personal level, but I think the EC should be fined 1.4 trillion for being even more of a scumbag than the company they are fining.

This brings me to fines in general. Humans telling other humans they are wrong, and they owe the person who is right money? Lawyers and bureaucrats, please do us a favor and die in a fire.
Christofer

February 28th, 2008 at 12:19 am

@55 So you are saying that it’s ok for european companies to break us law then?

They are not being fined for not being open source. They basically want them to open up their apis to make it easier for other software developers to build software that can interact with windows on the same level that ms products do.

The EC are not telling them to open up the kernel.

The money will probably go to en.wikipedia.org/wiki/European_Regional_Development_Fund
Slartibartfas

February 28th, 2008 at 5:40 am

“The event is a political grandstand for the most part. The EU, like the UN, requires that it’s member all cooperate for this to ultimately work. So what are the odds of that?”

You know nothing about the EU as it seems. The way the EU works has little to do with the way the UN works.

In regards to anti trust cases, the EU commission does not need the member states, it acts on its own behalf and also has the power to do so. It is responsible to the European Parliament which can impeach the Commission if it really fucks up and their decissions can be questioned in front of the European Court of Justice which decides than based on European law if the Commissions actions are lawful.

The member states have their own anti trust agencies, but they are not replacing the European anti trust actions but adding up to them, mostly for the smaller cases.

So better dont count on an immobile EU, as on the erea of anti trust it is not about talk but about real action. The EU commission has this proved over the years over and over again and before you dramatize this to an EU vs US case, you should know that the most common target logically have been big European companies. The point is, when big European companies have to abide the law, Americans doing business in Europe have to abide as well.
zeta

February 28th, 2008 at 6:32 am

@ 56: “For 1.3 Billion Dollars, they should be able to make their own open source OS”

They have already. It’s called Linux. Ever heard of it? You should’nt try it. It’s probably way over your head.
Pandrogas

February 28th, 2008 at 8:37 am

@59: Okay, my bad. They’re slightly more agile than the UN, but still a bureaucracy. Not saying a company doesn’t have to abide by the law over there, I’m trying to figure out what the law actually is that they are supposed to be abiding by. 1.3 Billion in damages out of a sprawling, legal driven commission is a bit excessive in most cases. Seems like nobody’s taking the EU serious so they decided to make some examples of companies to get their reputation up, that’s all.

@60: So, are they using it for those purposes? Is Europe propping Linux up with financial or development investments? Are they using it to help stimulate the economy? Before you go flaming people, maybe try to get at what I’m saying about the concept before going in for the details.
Tom Corbin

February 28th, 2008 at 8:43 am

Take a look at the EU competition commissioner. Pretty much says it all:

http://english.aljazeera.net/N.....3295BC.htm
The J

March 4th, 2008 at 5:54 am

61@1.3 Billion in damages out of a sprawling, legal driven commission is a bit excessive in most cases.

Well theres 2 issues here, this fine is only roughly double that of the last fine, where Microsoft just dismissed. So this fine is so big because Microsoft didt comply even tough they paid the last fine. And its only roughly 2 times as expensive. However the value of the $ is record low, now multiplying anything big by 1.5 is going to be even bigger. Its not entirely europes flaw that the dollar is doing so bad here. In fact this gives a lot of american companies a benefit.

Yes the fine is big but microsoft is big too so giving microsoft a fine that would be noticeable for microsoft. Anyway Microsoft makes more money in Europe than 1.3 billion yearly. (europe is aout 600 million people so the fine is roughly one euro per person microsoft gains about 200 euro per
1/2 person, calculate that).

Now in thinking this is a bit akin to the nordic way of fining for speed limit breaking. Where your fine is based on your last years daily salary. So you pay 12-30 *0.5-0.6 days worth of income. So be how rich as you might you loose as big a share of maney as a poorer person. So the deterrent is as big for both.