EU threatens Microsoft with more fines

After fining Microsoft a whopping €280.5 million ($369.5 million) last July for allegedly failing to comply with a 2004 antitrust ruling, the European Commission is back on the offensive yet again. This time, the Commission is threatening Microsoft with fines of up to €3 million ($3.96 million) a day because it believes the software giant is setting unreasonable prices for documentation competitors require to make their products interoperable with Windows. Microsoft attempted to justify its pricing with a 1,500-page document, but the Commission rejected that document in a “statement of objections” released on Thursday.

Unsurprisingly, Microsoft isn’t too thrilled with the Commission’s decision. The company’s General Counsel Brad Smith told the Associated Press that Microsoft asked for feedback regarding its pricing proposals and documentation six months ago, but that it had only just received a reply “thinly veiled in a threat.” Smith claims that the Commission is attempting to regulate the pricing of Microsoft’s intellectual property on a global basis, as well, which is out of its jurisdiction.

Comments closed
    • mdalli
    • 13 years ago

    Once again, the Europeans prove that if there’s one thing they truly excel (pun intended) at, it’s shutting down, penalizing and stifling successful business.

    If these bureaucrats actually had to run a private company instead of extorting money from those who do (at the barrel of a gun), they wouldn’t know what to do.

      • Shintai
      • 13 years ago

      LOL you are funny….as comedy..

    • Gandhi
    • 13 years ago

    y[

      • Chryx
      • 13 years ago

      Vista has better default OpenGL performance than XP did ? so no.

        • Shintai
        • 13 years ago

        It does? Since when?

        Its still an ICD made from the vendor. And in Vista its actually alittle slower. DirectX10 however is faster.

      • zzatz
      • 13 years ago

      Perhaps I phrased that poorly. Yes, they push DirectX in place of the portable OpenGL, leveraging their control over the desktop. And it worked for PC gaming. Call me a heretic, but I don’t think that gaming on PCs is all that important.

      Consoles are where the money is, and every console is designed for vendor lock-in. I don’t see control over the desktop offering much power over the console market. I could be wrong.

    • SnowboardingTobi
    • 13 years ago

    I don’t get it. What is it about MS Windows that the EU feels software developers cannot interoperate with? There’s plenty of software out there written for Windows so what’s the problem? MSDN is full of info so what else is missing?

      • morphine
      • 13 years ago

      The low-level communication protocols, which they obviously want to remain as closely-guarded as possible. Hopefully not going to happen.

      The EU is threatening them because it costs way too much $$$$ for said documentation (which in my POV should be nearly free anyway, with a low price just enough to cover the costs of creating and distributing it).

      • Shintai
      • 13 years ago

      Try write something for SMB or MAPI. Unless you got sourcecode access its pretty much impossible. Exchange+Outlook is one super monopolistic grip here.

    • liquidsquid
    • 13 years ago

    I hope MS just cranks up the price of their software in the EU to cover the fines, and continues on its way ignoring the EU. Oh wait, they are already doing that! What I would like to know is what the EU will do with that money. I would take a guess they parse it out to their own pals without benefit to consumers at all.

    -LS

      • albundy
      • 13 years ago

      thats why bacteria and politicians have everything in common. some little piggy is going to the top.

      • Shinare
      • 13 years ago

      Unfortunately its not just in the EU countries MS has jacked the prices up to cover their financial mishaps. Its everywhere, US included.

    • Lord.Blue
    • 13 years ago

    My biggest question is why it took the EU commision 6 months to respond to what MS sent them. I mean, come on, 6 months?

      • ioport
      • 13 years ago

      Like I said previously, in these matters there is a private back in forth process between you and the regulators, to facilitate your compliance efforts.

      Ultimately if you fail and/or are unwilling to comply within the given time frame, the regulators have the last final *and public* word regarding the issue at end.

      Microsoft is trying to spin that the regulators were not playing fairly, but people in this business know very well how tightly these processes are controlled and supervised with intensive in depth reporting. You just can’t “forget” something on the table and wakeup 6 months later.

    • zzatz
    • 13 years ago

    It is perfectly legal to have an effective monopoly. However, antitrust law holds that you cannot use the power of that monopoly to create new monopolies in other areas. Any new monopolies must be earned independently and not through leveraging previous monopolies.

    Microsoft has an effective monopoly over desktop operating systems. They would like to control the markets for backend servers, music distribution, instant messenging, web serving, and games. Gaming is the one area where they have not used control over the desktop to give their products an unfair advantage over others.

    If part of the desktop *requires* a Microsoft server, then that is extending the desktop monopoly into the server market. If the file formats and protocols are documented and freely available, then others can compete for the server market on a level playing field.

    The expert *selected by Microsoft* examined the documentation supplied by Microsoft and concluded that it was inadequate for building servers which could interoperate with Microsoft’s desktop software as well as Microsoft servers. In other words, Microsoft is using control over the desktop to gain server sales.

    No one is saying that Microsoft can’t compete for the server market. What the EU is saying is that they have to *compete* for it, actually earn it, without using control over the desktop to unfair advantage. If the interactions between the desktop software and servers are fully and freely documented, then there can be no unfair advantage.

    • lithven
    • 13 years ago

    This is how I understand this fine. (Someone can correct me if I have it wrong.) Microsoft submitted a 1500 page document with their proposed pricing to license the IP under the judgement. The EC replies 6 months later. The reply amounts to “This technology isn’t innovative and patentable, you can’t charge people for stuff that isn’t innovative and patentable. And by the way fix your pricing (ie free) or we’ll fine you 3 mil. Euros per day until you do.”

    To which MS replied “We’ve been asking for feedback and your first reply is a threat of another fine?! WTF?! Further it was never in the judgement or any agreement that we could only charge for technology that is ‘innovative and patentable’. Why are you changing the rules?”

    In that case I am tending to side with MS. Further if the EC is going to take the position that you can’t charge for any IP that isn’t “innovative and patentable” then that could have a dramatic cooling effect on many industries and companies.

      • ioport
      • 13 years ago

      Having to deal with regulators myself, there is usually an informal back in forth process going on between you and the regulators, just like you would with say internal or external auditors working for your company.

      In case of a regulatory issue, you would be instructed to comply with clear and precise guidelines to follow.

      In this case I suspect that Microsoft has not produced all the requested documentation as intended in the wording and intent of the 1st judgment, as set the price very high to make it difficult for small competitors to get it (restrict access by price) and probably stonewalled these discussions with the regulators to play for time as it has in the past in the US.

      Unfortunately for Microsoft as they can’t just send a campaign donation or phone calls to friends in power like they would in the US, the outcome was known in advance ==> ultimately the regulators have the last final and public word regarding the issue at end, in this case a 2nd fine for lack of compliance.

    • MadManOriginal
    • 13 years ago

    Fines – the new tax of the social welfare state!

      • Taddeusz
      • 13 years ago

      QFT… the EU is just milking big companies for cash

        • Shintai
        • 13 years ago

        You mean the companies that milk you with monopolies and price chartels? Omg what rudeness!

    • mikeyc765
    • 13 years ago

    Well, being my Libertarian self I object to the EU’s interference in MS’s business. They are a monopoly, but I don’t think they are a bad monopoly. They efficiently sell software that consumers want and price it in such a way that people are willing to buy. Yes, the price would be lower if there was more competition, but competing OS’s would only be a headache for software manufacturers who would now have to make software work on multiple platforms. The premium we pay for Windows is probably worth it.

      • Shinare
      • 13 years ago

      You are mistaken sir… people are not willing to buy it because it is priced just right. People buy it because they have to. Theres a biiiig difference. There is no such thing as a “good monopoly” unless, of course, you are referring to the board game.

        • bentbent
        • 13 years ago

        Microsoft is not a monopoly – you can install Linux on your pc, different versions of dos (non MS versions) and even OS2 WARP if you want.

        MS is simply not a monopoly but a successful company – and this is off course hated by socialists – such as the EU.

        BAN the EU!

          • Shinare
          • 13 years ago

          y[

            • d2brothe
            • 13 years ago

            Damn, I’m as sick of people who think that Linux is ready for desktops as I am of the EU. SERIOUSLY….HTF should someone who can’t find the ON switch for thier computer install Linux…this is your AVERAGE user, just cause 0.1% of users can install and use Linux in a way that is not completely limiting, doesn’t mean its a competitor to MS….Seriously….figure it out…microsoft could loose the revenue from EVERY user capable of installing linux, they probably wouldn’t even notice.

            • rythex
            • 13 years ago

            Go buy a mac…

            • stdPikachu
            • 13 years ago

            Who the hell said anything about the desktop?

            I’m a Linux server admin and I would absolutely *kill* to be able to set up a *nix box that could a) act just like an Exchange server and b) act as a DC. That way I get a backend infrastructure compatible with our windows workstations that’s an utter piece of piss to administer.

            Why don’t/can’t I do a) or b)? Is it because Linux isn’t ready for the desktop? Or because MS keeps the protocols secret and uses that as leverage to get people who use exchange/AD locked into more and more MS products (e.g. Sharepoint)?

            The EU is fighting for the free market here, guys.

            Back to your desktop comment re: Linux; true, most users can’t pick up a bootable CD and carry on happily with their windows-esque workload. However, a Linux system that’s set up for you and administered by someone else isn’t that far away from the Windows setup in 99% of medium to large businesses. From then on it’s just a (comparatively) simple matter of learning the applications which are typically 90% similar to their windows equivalents.

            /annoyed at people who seem to be missing the entire point of this and turning it into an EU vs. US or WIndows vs. Linux issue when the real crux of the matter is a level playing field for everyone in the computing world

          • adisor19
          • 13 years ago

          MS is NOT a monopolly ?! HAHAHAHHAHAHAHHAHAAAHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAAHAHAH

          Adi

      • poulpy
      • 13 years ago

      “They are a monopoly, but I don’t think they are a bad monopoly”

      Monopoly is bad by definition

        • willyolio
        • 13 years ago

        no. monopolies aren’t inherently bad, it’s when the companies take advantage of that fact. which is almost always.

    • Gandhi
    • 13 years ago

    Good to see the EU having a backbone and forcing MS to follow through on what it agreed to back in 2004.

    Pity I can’t say the same for their US counterparts.

    • Philldoe
    • 13 years ago

    The EU are really starting to piss me off. Bill should tell em to shove that fine up their asses.

      • Shintai
      • 13 years ago

      Ye..competition is such a bad thing 🙁

        • Philldoe
        • 13 years ago

        Competition from who? Apple? That’s a good one. Linux? That is also a good one. Joe Sixpack just isn’t up to speed with computer tech to be able to use Linux with out first getting help from some one who uses Linux a lot.

        And Honestly is the EU really doing any good? Microsoft is to big for some dinky little fine to hurt them. the UE is jsut wasting it’s time and money that could be spent on bigger and better things.

          • Stefan
          • 13 years ago

          So, you concede tha MS is has a monopoly on OSs. Well, THAT makes regulation necessarcy, don’t you think so?

            • Philldoe
            • 13 years ago

            They do not have a monopoly Yeah they do have the vast market share. but what are all these bullsh!t regulations going to do? are they going to get OSX and Linux more share? No. All they will do is take time away from more pressing matters.

            • wierdo
            • 13 years ago

            if they open up the proprietary formats that keep MS a monopoly then it may indeed help. The main reason MS doesn’t have competition and charges what they please for their stuff is because other software and OSes can’t be compatible with it in many areas due to a buncha innovation-killing patents.

            • Shodan
            • 13 years ago

            At least the EU is trying to do someting, that alone is better than doing nothing.

            • ludi
            • 13 years ago

            I’ll bet you would be the first person to grab a container of clear liquid and throw it on a fire, therefore “doing something, which is better than nothing”, without checking to see whether the continer is labeled “gasoline.”

            Something can be much worse than nothing if something is done shoddily, or done mainly to the beneft of those who are actually doing it rather than the body of people they supposedly represent.

            • Shintai
            • 13 years ago

            Why do you think MS earns some 15-20 billion $ in profit each year. because they make superb SW? Or because they got a monopoly.

            • ludi
            • 13 years ago

            A little of both, actually, if by “superb” you mean “passably useful for a majority of consumers” and by “monopoly” you mean “not actually a monopoly, but a lot of market power is there.”

          • ludi
          • 13 years ago

          Again, note the post contents: the last time the EU took a swing at the Microsoft pinata, 280 million euros fell out. That sounds like a trick worth repeating. The EU may be wasting Microsoft’s time, and other people’s time, but their own time seems to be paying off rather well.

      • flip-mode
      • 13 years ago

      I’m really pleased with the EU – they’re the only one’s standing up to Microsoft. Microsoft does put out good software, but they’re still a monopoly with the OS and as far as I’m concerned with Office too. Me no like monopolies and anything the EU can do to weaken Microsoft’s position is OK with me.

      • ioport
      • 13 years ago

      Well Microsoft could, but it would also at the same time exclude itself from the biggest market in the World.

      That kind of destructive attitude may sound good to hotheads and jingoists, but it would be disastrous for a corporation.

      I think part of the problem is that Microsoft is too much accustomed to doing business “the US way”. Where regulating bodies do not really exist, are dysfunctional or noneffective as politicians pulling the strings are just a short step from being actual employees of these big corporations.

      Seeing how much public money gets pumped in companies like Halliburton for example, I wonder if GWB is on their payrol or pension fund and Microsoft already managed to dodge a bullet at the 11th hour in the US.

        • ludi
        • 13 years ago

        It really is rather amusing to hear people outside the US patiently explain their in-depth knowledge of the US system and its operational flaws, when in fact they are mainly regurgitating a list of international media soundbites so tiresome and keyword-jingoistic that I can just about lip-synch the post contents.

      • wierdo
      • 13 years ago

      I’m actually glad they’re doing the job of our DOJ, they dropped the ball bigtime here.

        • Chrispy_
        • 13 years ago

        As far as I’m concerned, the fines aren’t doing the job, because MS has totally ignored them for 24+ months.

        Quadruple the fines, maybe then MS will get the frickin’ idea.

          • bender
          • 13 years ago

          Are you guys serious? Microsoft, believe or not is the reason that our computers actually work with each other. If MS stopped making Windows, what would happen? A common OS makes it possible for the world of business to operate. For instance, OSX has what…some 8% of the market, perhaps? If, then, 6 other major OS’s popped up and the monopoly was disintegrated, how would tech support ever happen? How would people write software and expect it to run on other computers? Why do you think Microsoft, who can afford to assemble the best software development team on the planet took 5 years to come out with Vista? It was really hard to make!

          This is so stupid…sometimes there is an advantage to having a voluntary monopoly. LINUX IS FREE!! Microsoft can’t change that. But there is a reason nobody (sorry) uses it. It is too hard to for the average user. Businesses can’t operate using software that makes things HARDER.

          OSX…fine, not my cup of tea, for sure, but Apple has been making OS’s for a LOOOONG time now…it obviously doesn’t have what it takes to really stand up against Windows, even as it has become much more interoperable with Windows.

          EU: instead of fining MS for making a good product that makes things easier to do and people want to use (after all XP Lite was such a success! Thanks EU!)…offer an alternative. Oh. Got nothing? Exactly, blow it up your….

            • albundy
            • 13 years ago

            “If, then, 6 other major OS’s popped up and the monopoly was disintegrated, how would tech support ever happen?”

            Yeah, for once the techs would probably get paid half decent wages, instead of the shiat to minimum wages they make now. Experience would become crucial and it would be quite nice not to have help desk read off their screen, and actually tell you how to fix a problem. Cant wait for that day! Its quite a shame that everyones life revolves around MS products. would be nice for someone to abolish MS slavery on a global scale, not that I dont like MS.

            • Taddeusz
            • 13 years ago

            If it weren’t Microsoft it would be someone else we would be complaining about. As much as I dislike the way Microsoft has done business in the past there is something to be said for having the kind of interoperability that Microsoft has fostered. While the same could be said for the Linux community I don’t believe the usability is quite there and the software is effectively a moving target as an ongoing beta. Whereas with the closed source Microsoft software you at least have a stratified user experience for a much longer period of time than you ever get with any distribution of Linux.

            • bender
            • 13 years ago

            Wages are set by market forces, my friend. 90% of tech support could be administered by 6 yr olds if they had the social skills to do so, and they would work all day for a cookie. If a job require real skills…not the kind that my 6yr old kid already has, wages will be higher. Maybe tech support should unionize and rape the system like many others have done. Or maybe they should move into something that requires some real skill, and thusly demands better wages…oh wait…that would require a real investment on their part, and they might find out that they don’t have the skills too acquire a higher paying position. You’re right, whining is a whole lot easier, and you don’t have the potential to take a big ego hit.

            This is not a MS conspiracy as you seem to be implying.

            • Gandhi
            • 13 years ago

            y[

            • bender
            • 13 years ago

            Right, and as if the Linux guys can agree on ANYTHING (besides MS is the antichrist)? God I wish they could…I would love free OSs, but – they have to be on par, quality wise, with what MS offers. To me…and an overwhelming majority of the world, Linux has not hit that level yet. Or maybe we could just go the Linux route and support 45 protocols for everything…again: just not very useful for companies that use computers as TOOLS, and lose productivity every time they have to struggle to make things work, or wait for tools to be written for what they need.

            OSX has direction and coherence, it’s just a little too ‘kiddy’ for a lot of business users, and software support is way too limited for all but a few applications.

            Anything else out there?

            • Gandhi
            • 13 years ago

            First, vast majority of servers and businesses run on *nix variants (Unix mainly, but Linus is gaining as well). As for the personal computing side, I do not want in to a OS debate.

            Suffice to say, it is MS monopolistic practices (see particularly their onerous licensing terms with big-box makers) that ensures that consumers dont have a choice. And MS tries to extend that monopoly by hiding from other software makers the way the desktop OS hooks into the server version. And this is why the EU is getting on MS case.

            Wish the US DoJ had some balls to go after MS for flaunting the trms of the antitrust case agreement.

            • ludi
            • 13 years ago

            *nix variants for enterprise use aren’t a moving target and neither is their hardware base. If you want a server that can run continuously for a year with a reasonably fixed applications and hardware base, and no downtime, by all means put in a *nix machine.

            In many cases a *nix variant will be entirely inappropriate for the 800 desktop PCs accessing that server, however.

    • FubbHead
    • 13 years ago

    Well, they will continue to get these kind of fines as long as they continue cramming every little penny out of people and business they can like they do, which of course they can only do because they *are* virtually a monopoly.

      • ioport
      • 13 years ago

      So how much does the documentation actually cost?

      On the OS itself, I think the 120

        • Shintai
        • 13 years ago

        Pennies because its already made for internal MS coders. So in worst case its a somewhat minor rewrite. Maybe 20 peoples work for 3 months.

    • ioport
    • 13 years ago

    Why on Earth do you need a 1500 pages document ***to simply justify*** the price of documenting software?

      • Freon
      • 13 years ago

      Hey, the lawyers on both sides need to justify their fees. Shush you!

    • dragmor
    • 13 years ago

    Well that will make the price of Vista match the US price.

      • Anomymous Gerbil
      • 13 years ago

      How? This is referring to interoperability documentation, not the OS itself.

        • dragmor
        • 13 years ago

        Vistas Euro price is 150% to 200% more in Europe when you take the Tax out. EU fines MS, MS gives them more expensive software to recomp the costs.

    • DrDillyBar
    • 13 years ago

    Okay. Hypothetical…

    What if Microsoft just decides pulling out of EU territory is worth more then the IP and 4Mill Euro’s a day.

      • Shintai
      • 13 years ago

      Losing about 40% of the marketshare to another OS type? Without such a monopoly their profits and revenues even in the US would drop dramaticly. It would basicly be suicide.

      • impar
      • 13 years ago

      Greetings!

      Why would a company leave the largest market in the world?

      I am amazed as Microsoft still hasnt complied to a 2004 decision.

      Dont be fooled to think EU is anti-Microsoft, a week ago escalators/elevators companies were fined $1,3 Billion for price fixing cartel actions:
      “European Union regulators on Wednesday fined United Technologies’ Otis unit and four other elevator makers $1.3 billion for operating cartels for the installation and maintenance of elevators and escalators in Germany, Belgium, Luxembourg and the Netherlands.

      Fined were Hartford, Conn.-based United Technologies Corp., the corporate parent of Otis Elevator; German conglomerate ThyssenKrupp AG; Finland’s Kone Corp.; Switzerland’s Schindler Holding AG; and subsidiaries of Japan’s Mitsubishi Elevator Europe BV.”
      in, §[<http://biz.yahoo.com/ap/070221/eu_elevator_cartel.html?.v=10<]§ If the actions or omissions of a company working in EU space threatens competition, it WILL get fined. How much lobbying the company can make is irrelevant. Everything else is just EU bashing. It may be fashionable but its also irrational.

      • alphaGulp
      • 13 years ago

      Leaving the EU would mean that multinationals with significant presences outside the EU would need to ditch Windows to keep their users / servers on a single platform, or at the very least start making all of their user software compatible with Firefox, Linux, etc.

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