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EU Fines Microsoft $1.3 Billion
Posted by
kdawson
on Wed Feb 27, 2008 08:39 AM
from the cost-of-doing-bidness dept.
from the cost-of-doing-bidness dept.
jd writes "The EU has slammed Microsoft with a fine of €899 million ($1.337 billion at current exchange rates) for perpetuating violations of the 2004 antitrust ruling.The fine is the sum of daily fines running from June 21, 2006 to October 21, 2007. It is the first company ever to be fined for non-compliance. The amazing thing is that the EU now expects Microsoft to comply and 'close a dark chapter' in their history. The EU has opened new investigations into Microsoft's practices and gave a lukewarm response to the company's turning over yet another new leaf last week."
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Well... (Score:5, Funny)
Re:Well... (Score:5, Informative)
Today it hit the lowest ever value against the Euro.
Parent
Re:Well... (Score:5, Informative)
Euro an ECU are not the same thing, but when the second replaced the first one, its value was chosen to be initially the same. Look for the ECU [wikipedia.org] and Euro [wikipedia.org] wikipedia pages.
Also coins and notes are available only since 2002.
Parent
Re:Well... (Score:5, Funny)
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Microsoft Reduces its Offer for Yahoo! (Score:5, Funny)
Problem? Solved.
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Re:Ha ha ha ha... (Score:5, Insightful)
Try finding a way to voice your concerns without resorting to hyperbole. We're all pretty smart here, you don't need to make a bigger case than you've actually got for us to 'get it.'
Parent
Re:Ha ha ha ha... (Score:5, Insightful)
"You know, there are real dictators in the world, who are truly evil, and are working to oppress their people." The removal of powers from elected parliaments, by devious method, to an unelected and undemocratic executive, Council of ministers, which holds its meetings in secret, unelected commissioners, and a very weak parliament that is bought and paid for by the latter.
Too bad that your prejudice has kept you from keeping track of recent developments. This criticism has been levelled at the EU for a long time and was to an extent justified, but guess what? They have actually done something about it. The European Parliament, which is directly elected and no longer as weak as it used to be, has received new powers with every treaty revision since 1992 and plays an integral role in EU law-making. Meetings of the Council of Ministers are not secret, as you can see on its website [europa.eu], which states: "All Council deliberations under the co-decision procedure are open to the public. The Council's first deliberations on legislative acts other than those adopted by co-decision are open to the public. The Council regularly holds public debates on important issues affecting the interests of the Union and its citizens, as well as policy debates on the Council's programmes." FYI, the co-decision procedure is the most commonly used procedure in EU legislation. Granted, institutional reform is slow, the EU still has work to do in terms of its accountability and communication with citizens, but that hardly makes it an evil oppressive dictatorship, which is the point that you were trying to make. Apart from Belarus, you will indeed not find oppressive dictatorships in Europe at this time, and the EU was established precisely to keep it this way, which brings me to your next point.
Yes, Europe has a fine tradition historically to be able to ignore history and repeat past mistakes yet again. Europe's ability for arrogance is only matched by its fantastic ability for creating evil, two world wars, and hundreds of millions of dead. How could I possibly not trust a European elite running out of control, and with a massive cavern where democratic due process should exist, but doesn't.
Please explain first who you mean by "Europe" and who exactly is being "arrogant". Is it Britain, Germany, Russia, France, Greece, Spain, Poland, Hungary, Sweden? Does every single one of this country have a "fine tradition to be able to ignore history and repeat past mistakes"? Last time I checked, Germans are still making up for the crimes of the nazis and not exactly preparing a second Holocaust. The Scandinavians no longer send out marauding bands of pirates to rob frightened people in coastal places. In Spain acknowledgment is slowly growing for the abuses and oppression of the Franco dictatorship, even on the political right. Italy does not seem eager to resurrect the Roman Empire. You may note that none of these examples has anything to do with the other, which illustrates that you can't generalise across an entire continent. I could even go on and argue that the one country which seemed unable to learn from history (notably European colonial history) in the last few years, with an elite running out of control causing millions of dead, does not lie in Europe, but I don't want to ignite another flamewar. In any case, as I mentioned before, the EU was established to prevent repetition of the mistakes of the past. It has been rather successful at that, considering that France and Germany are unlikely to go to war with each other at any point in the near future. It obviously does not have a perfect record, as was shown in the fall of Yugoslavia in the 1990s. Still, I fail to see how you can see the current European elite as being "out of control" or suggest that it will cause millions of people to die any time soon.
This same EU that's failed 13 years of account audits?
What does failing 13
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Re:Ha ha ha ha... (Score:5, Insightful)
The EU is not an evil government and Microsoft is not a defenseless do-gooder. This is not the first time MS has been in trouble because of its business practices, althought in the US, since Bush came to power, they've sure enjoyed a nice ride over there, haven't they?
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And what if not? (Score:5, Insightful)
Re:And what if not? (Score:5, Informative)
And they'll keep doing it for as long as it takes.
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Re:And what if not? (Score:5, Insightful)
So lets apply this to Microsoft and then the free market in general. In this case Microsoft will have to pay lots of money to the EU. If they attempt to pass this cost on to consumers, it will strengthen OS X, Linux, Solaris, etc as alternatives to Windows. This means that in the case of Microsoft monopolizing the market, the EU fine can accomplish its task of lessening Microsoft's stake in the market if it is large enough. But if they have full control of the market, well that's why governments reserve the right to break companies up. If a fine would not be sufficient to punish a company, they could be split into smaller companies that would have to compete against each other.
So in the end, it isn't necessary to give the fines to Microsoft's competitors as you propose. Simply the act of fining Microsoft should be enough to help its competitors out.
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Re:And what if not? (Score:5, Interesting)
If I built soapbox racers in my garage at home and branded them BMW, then someone lost a head in a collision in my not-quite-safe car, don't you think that BMW would be less than thrilled?
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Re:And what if not? (Score:5, Funny)
You were shooting for +5 funny, right?
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Re:And what if not? (Score:5, Funny)
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Re:And what if not? (Score:5, Interesting)
This judgement seems pretty final (MS has been showing contempt for the court for years) so, to answer the question, I'm guessing if MS don't pay up now, the EC will just freeze their EU bank accounts, and rumour has it that Microsoft keeps most of its money in Ireland as a tax dodge. I guess they could raid their offices and take away their furniture (or what's left since Ballmer's last European trip) too, but that would be messy and not too cost effective—I'm sure MS has billions in the bank.
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Re:And what if not? (Score:5, Interesting)
What Europe doesn't have is the legal "corruption" of corporations financing politicians campaigns' in exchange for favours - which is what grandparent was alluding to I think, and the primary reason Microsoft doesn't have the sort of influence it does in the US.
Parent
Apparently linux is the new kid on the block (Score:5, Funny)
Re:Apparently linux is the new kid on the block (Score:5, Funny)
hmm, will it be Illegal for MS to screw Linux?
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Even as an MS fan, good... (Score:5, Insightful)
Now, I'd like to see the EU start to use the same stick on large companies that also feel that they are above the law.
Re:Even as an MS fan, good... (Score:5, Informative)
They do again and again. It's mostly, but not always price fixing. Other examples include Volkswagen that threatened their Italian dealers to pull the dealership when they sold to customers not living in Italy.
Fines are usually very hefty and companies usually comply. Micropsoft risks to fall really flat on their face if they try their usual stints here.
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Re:Even as an MS fan, good... (Score:5, Informative)
Lift cartel: http://www.eubusiness.com/Competition/lifts-cartel-eu.33 [eubusiness.com]
Zippers: http://www.eubusiness.com/Competition/1190197926.91/ [eubusiness.com]
Dutch brewers: http://www.eubusiness.com/Competition/beer-cartel.09/ [eubusiness.com]
All hundred million dollar fines or more...
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Re:MS can't win (Score:5, Insightful)
Frankly, the EU doles out fines to any companies who disobey European laws. Microsoft broke the law they got fined, they ignored the findings/requirements of the remedy they got fined again. There isn't any evil European persecution of an American company going on here. Just a company being fined for breaking the law.
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Did you see that? (Score:5, Interesting)
I'm absolutely stunned that someone, some government, finally got up the nuts to face off with the Monopoly. Took 10 years to get done, but FINALLY!! Think we'll see some big changes at Microsoft soon? Watch carefully. The fireworks are about to start.
It would be interesting... (Score:5, Interesting)
I would be very interested to see what would happen if a tech giant decided to play hardball with a government. After all, the Microsoft decision makers that count would be beyond the reach of the European authorities in terms of arrest and imprisonment.
Re:It would be interesting... (Score:5, Insightful)
If MS was to try and pull that, we'd contract with Red Hat, Novell, somebody, and be up and running before the licenses expired. There's only a few apps that are Windows only that don't have linux equivalents; if someone was to throw a few million at it they'd be ported to linux in no time, even if it meant running with wine in the interim.
Try a stunt like that with a real government that can throw billions at the problem, and MS would find itself in the freezer. Remember, governments can pass laws; they can easily pass a law suspending copyright until they get it sorted out.
Parent
Re:It would be interesting... (Score:5, Insightful)
Oh - and those licenses, we don't need them: you copyrights are void.
Parent
Re:It would be interesting... (Score:5, Interesting)
But...
I had the misfortune to have to do business with MS in the '90s before the first judgment came down against them in the US. They told us privately that if the US government tried to break them up they would just move across the border to Canada or just buy a small country, preferably an island, and move the whole company out of the US. They also threatened, privately, to just stop selling Windows and technical support to the US government.
I was working for a baby bell at the time and so we were able to explain to them what it is like for a company to operate for 60 years under judicial supervision. Not nice. In the US a federal court judge can throw the entire executive staff of a company into prison for as long as he likes if they pull the kind of thing you suggest MS pull. They can appoint people to run the company until such time as it is in full compliance with court orders. And, a federal judge can send US marshals anywhere in the world to capture these people. (Yes, it may be kidnapping in the country where they reside... but the judge can still do it), and a Federal Judge can request that the President use military force to capture some one. So yeah, they can send in the Marines... Ok, that last bit is very unlikely to happen, but it could.
I do not know what the EU can do against a company that flaunts its laws. But, I am sure that at least some of the member states have laws similar to those is the US.
Just an example... I once worked for a fellow who was indicted for murder in the state of Illinois. He lived in the state of Utah and Utah declined to extradite him. He now is unable to leave the state of Utah. If he sets foot out side of Utah he can be arrested and most likely will be extradited to Illinois where he will be tried for murder. The same could happen to all the board of directors and all the executives of MS. They could be extradited to the EU to face criminal charges there, or if the US refuses to extradite them they could find that they can never safely leave the US again for fear of being extradited to the EU and spending a large part of the rest of their lives in jail.
No country can fail to react swiftly and harshly to any attack on the sovereignty and that is exactly what MS would be doing if they did what you described.
Stonewolf
Parent
Re:It would be interesting... (Score:5, Insightful)
MS would be very, very screwed if they would try to do anything like this. Let me put things into perspective:
The EU area has a GPD of $14.51 trillion, while MS has a revenue of around $51 billion, globally. The EU has the power of the police, government, military behind them which can seize MS's assets and if MS decides to pull out of EU they would leave billions in assets behind. If events reach that point, EU given the national security clauses in copyright conventions would simply suspend MS copyright in Europe while Europe moves to Linux/BSD/Solaris at a hugely accelerated pace. Given that the EU is the largest economy block in the world, everyone else would be forced to use those open technologies and MS would find itself with a pretty minimal market share in a few years.
Even Microsoft isn't this stupid to make a move anything like this.
Parent
That's 984 Billion in American rupees (Score:5, Funny)
Europe and California lead the way? (Score:5, Insightful)
Europe and the "nation-state" of California may be our only hope of leveling the playing field with regard to how corporations do business.
We, as a nation, need to demand that our elected leaders start regulating these companies for the good of the country and the planet. It should not be wrong to force telecom companies to open their networks to competition, or to require stricter air quality and fuel economy from the energy and transportation sectors of our economy. How about regulating banks and credit institutions with regard to credit risk? Then punishing banks that make stupid decisions - and then sell those stupid decisions to other investors.
To those that say that more Government will only screw things up: Look around you. Corporations left to their own devices have screwed things up royally in the last 8 years.
Football games have referees for a reason - the same reason that businesses need government regulation. You can not have a level playing field without government regulation.
-ted
Neelie Kroes (Score:5, Interesting)
Because the European Union is a progressive liberal democracy, she is allowed to have more balls than her US opposite number.
Microsoft needs to get a move on. The fine is in Euros, and if the Euro continues to appreciate against the dollar when they eventually pay it may bankrupt them. (this is a joke. It is a feeble joke but a joke nonetheless.)
Incidentally, and this is quite true, one of the lawyers for Microsoft summarised their case like this: "We are Microsoft. We are the good guys. So what we want to do is right." Now compare that with HP, who have people based in Europe who talk to the Commission and say, in effect "We would like to do so-and-so. Is that all right?". Strangely, you don't hear about massive fines for HP over their dominance of the office printer market.
It has been clear to me for a number of years that Microsoft simply needs to grow up as a company, like small children who, if their parents do a half decent job, learn to get what they want by politeness and cooperation, not by kicking, screaming and stealing toys. But, in order to change, they have to recognise the need for change. I suspect that their technical people are well aware of this, but some of the management is still in "if it ain't broke don't fix it" mode. The MS XML saga is pretty conclusive evidence of this. I bet there are project managers in ISO who by now will do their best to sabotage any Microsoft standards project, simply because they have been so pissed off by them.
Re:1.3 billion (Score:5, Informative)
I also don't understand why the size of the fine "clearly" indicates that people are lining their pockets. This is not the largest fine ever issued. (ExxonMobil was fined $5 Billion for Exxon Valdez, later halved, but so far not paid.)
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Re:1.3 billion (Score:5, Insightful)
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Re:1.3 billion (Score:5, Informative)
From the EU website:
The penalty payment is paid into the EU Budget. It does not increase the budget, but reduces the contribution from Member States and so from taxpayers.
So in deference to us paying the Microsoft tax Microsoft is paying (a small part of) EU tax, brilliant
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Re:1.3 billion (Score:4, Insightful)
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Re:1.3 billion (Score:5, Funny)
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Re:1.3 billion (Score:5, Interesting)
The only punishments that would hurt Microsoft have been illegal since the Dark Ages.
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Re:1.3 billion (Score:5, Funny)
You mean waterboarding?
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Re:1.3 billion (Score:5, Insightful)
This is the most appropriate punishment because it is MS's anti-competitive behavior that would ultimately lead to them being barred from competing in the marketplace. It's not like people wouldn't be able to buy Macs or install Linux for their OS or use Open office/other alternatives for productivity.
Heck it might actually do the industry some good, nothing breeds innovation like necessity.
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Re:1.3 billion (Score:5, Insightful)
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True (Score:5, Insightful)
The same thing is happening here, complying would cost more than the fine. We need some equivalent of "wheel clamping" for Microsoft.
I wouldn't count on it happening though, I can see states getting used to a regular "microsoft fine" dividend. They will probably have a routine of Microsoft saying it will clean up, not doing so and being fined again.
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Re:True (Score:5, Funny)
How about bolting the chairs to the floor?
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Re:1.3 billion (Score:5, Insightful)
In essence, Microsoft is gaming the system, breaking the free market.
There's a point of view that what Microsoft is doing is completely rational, and that the problem isn't what MS is doing, but that their competitors *don't* do those things, and instead naively try to compete on technical quality and consumer appeal. While I disagree with this point of view, there's one aspect I can agree with, which is that MS is acting rationally. What the EU is doing (or should be doing) is imposing such extreme restrictions and/or fines on MS that it is no longer rational for them to abuse their position the way they do.
That's why the answer to:
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Re:Unfair? (Score:5, Informative)
"You are not allowed to use a monopoly in one area to try and leverage an advantage in another area."
That is why different rules apply to Apple and various X/GNU/Linux distributors as apply to Microsoft.
Microsoft has an effective monopoly in the desktop OS market, and by bundling Windows Media Player (and MSIE for that matter...), they are creating a situation where people might use it to create WMP files (especially as that is the default).
You might say that it isn't a big deal if people rip CDs to WMP, but then they want to play them on a portable media player, they have to make sure that it plays them. The company that makes the media player is giving a kick-back (patent licencing?) to Microsoft, and thus Microsoft is leveraging its monopoly in the desktop OS to give it an advantage in another market.
That is just one example of why they shouldn't be allowed to do it, but there are plenty of others.
Parent
Re:Unfair? (Score:5, Informative)
Because MSFT dragged their feet in complying they were fined some 2 million euros a day. This is that fine. this has nothing to do with windows media player as MSFT already took care of that part by releasing a media player free version of windows.
Also as a side effect this is 1.3 billion less dollars that MSFT will have to buy Yahoo with. Some 6% of the cash MSFT has on hand.
Parent
Re:Interoperability of Office? (Score:5, Insightful)
You seem unclear on the concept of "rights". A "right" is something that a government has decided you may do. This government has decided that they do not have this "right". You can't wave a magic BS stick in the air and make it so that they do. They don't have the right because the EU government bloody well says they don't, and that's all there is to it.
Parent
Re:Interoperability of Office? (Score:5, Insightful)
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Re:at current exchange rate (Score:5, Interesting)
Last week one of their managers said in an interview that the cost of the EU-required documentation had wiped out most income of the past year.
And now the EU does not accept this documentation
Or more accurate, does not accept the price attached to it.
Parent
Re:1.3 billion ~= nothing, not to stock holders (Score:5, Interesting)
MS's stock price is down and going lower. MS's cash equivalents on hand have drop from a high of over $50 billion to near $20 billion. MS is plowing billions of dollars a year into product areas such as the X box and their online business that are losing billions of dollars every year. Having to pay a fine of $1.3 billion costs them about 7% of their cash on hand. That is $1.3 dollars that they can't spend on developing new markets, it is #1.3 billion they can't ever hope to use to create stock holder value. This is a big enough fine to cause MS's board of directors and MS's executives to be sued by the stock holders and removed from their offices.
This kind of a fine, especially if it is followed up by stock holder suits can lead to a drop in the stock price that will cost Gates and crew billions of dollars off of their personal net value, force to company to pay the stock holders an equivalent amount of money, and force major changes in the board of directors.
This fine is a big deal.
Microsoft may well be heading into a perfect storm of legal shit.
And, do not forget that the only reason they got a slap on the wrist in the US is because MS spent lots of money on the Bushies and their corporate dogs. The Bushies and the whole neocon (neofascist) crew are not going to be in office in January 2009. The political storm sweeping the US right now is like nothing I have ever seen before. And I lived through most of the 1950s and 1960s.
MS is in trouble.
Oh... for those with no perspective, this is a story that is going to play out over the next 10 years, not the next 10 months.
Stonewolf
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Re:7.6% (Score:5, Insightful)
That's how it works in the EU, you don't get to continue doing what you were fined for after you pay your fine! (Otherwise people would be speeding all the time, and when stopped would say, "I already paid my fine", and would get let off!)
I think it works that way in the USA too, but don't quote me on that.
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