Microsoft Set To Be Fined $2.4M a Day

Nexum writes "The BBC is reporting on a European Union threat to fine Microsoft up to $2.4m a day for their non-compliance with the European Commission's demand that Windows be opened up. Back in March 2004 Microsoft was ordered to open up its Windows operating system by way of making documentation available that would assist work on interoperability with other systems, specifically: 'non-Microsoft work group servers [should be able to] achieve full interoperability with Windows PCs and servers'. According to the article, Brussels has found MS to have not complied with the ruling, and, sounding somewhat exasperated, EU Competition Commissioner Neelie Kroes has given MS a 5 week deadline before the $2.4m/a day fines begin."

Just a question

[jdwest]

Would MS even feel a $2.4M/day pinch?

Billy wouldn't even get out of bed for less!!

[Zebadias]

How about a 24million a day fine!

Debt collection

[ettlz]

Just how can the EU make Microsoft pay this?

Typical stalling tactics

[Recovering Hater]

And M$ will predictably wait until the last minute to provide documentation. I'm sure the documents that M$ provides will be bare minimum in scope just to get off the hook. Nothing to see here. Move along...

876 million/ annual

[IAAP]

I agree completely. Then again, 2.4 million per day comes out to $876 million for the year. Even MS would feel that and it wouldn't do much for the stock price either. Even then, I'd like to see the EU collect. That would REALLY be interesting!

Re:this is stupid

[puke76]

I'm not sure Microsoft's shareholders would share your sentiment. I'd like to see the market reaction to that announcement: "Our customer base is now halved."

Re:Debt collection

[Chyeld]

To do business in the EU, just as you have to in the US, you have to have licenses, permits, etc. All of which require periodic renewal. If Microsoft simply said "See ya!" and let the fines rack up, they would not be allowed to renew those items. They would eventually no longer have the legal ability to do business in the EU. Then they would either have to settle (for a far smaller sum if history is any indicator) or pay up to be able to regain that privledge.

Also, since they have headquarters and subsidaries in the EU, those would be shut down when the licenses and permits expired.

Plus, if the EU really wanted to be mean, they could order seizures of Microsoft products being sold in EU stores.

Will any of this happen? Unlikely, but it works on paper.

Without the legal ability

Re:this is stupid

[aug24]

I wouldn't be surprised if even more than half of MS's paying customers were in the EU.

I often get the impression that the yanks on this site think they outnumber the limeys by a huge factor. In fact there's only about five times as many (300 million to to 60 million).

Now add in Germany, Turkey, France, Italy, Spain, Poland, The Netherlands, Greece, Portugal, Belgium, Hungary and a few more to get the EU, and you're up to about half a billion. That's half as big again as the US, and could easily scale to be more than half the licensed users of MS products.

Justin.

Re:Just a question

[Doctor Faustus]

Couldn't giving up a competitive advantage also open them up to shareholder suits?

Re:morons...

[lowe0]

It's a combination of simple math and not-so-simple prediction. There's really 3 options:

1. Pull out of the EU. This will cost them a ton of revenue in Europe, though the OS can still be imported. They save 2.4M a day and keep their protocols closed.

2. Open the protocols. This will cost them the value of having closed protocols, the cost of compliance, and anything else the EU wants now that they know MS is... willing to negotiate. On the other hand, they keep their market (including all the marketing dollars they've spent building mindshare) and their 2.4M a day.

3. Stay in, pay the fine, and keep the protocols closed. This will cost them 2.4M a day, and REALLY piss off the EU.

So the questions are: is staying in Europe worth 2.4M a day? Is keeping the protocols closed worth the lesser of current and future revenue from Europe or 2.4M a day (or more, if other governments decide to sue as well)? If pulling out of the EU is the most beneficial option (I doubt it is), then it's not American arrogance - it's simple business sense.

There's one more caveat, of course - the nuclear option. If MS pulls out and customers simply import their MS software, the EU can levy heavy tariffs, or even declare MS' IP to be public domain. Either one of those is going to start an ugly international trade dispute.

I'll explain

[jjustus]

why the EU has this kind of power over Microsoft? I thought that Microsoft is a U.S. based company that must obey U.S. laws.

Of course you have to obey the laws of the country you do business in. Let's say a hypothetical company in Fuckmenistan is allowed to kidnap and murder their competitors at will, according to Fuckmenistan's laws. Now are you saying that they should be able to do this in the U.S. too, because they are a "Fuckmenistan based company"?

A downside where it's even easier to create viruses and worms that cripple Windows, given an intimate knowledge of it's propritary inner workings.

Well, intimate knowledge of inner workings of Linux is available freely, but not many viruses and worms seem to be roaming around. Maybe more openness could be a good thing, if MS is willing to improve their products based on criticism? Also, this is probably not about the inner working of the OS, but communication protocols.

They'd better clean up their act!

[Eternal Annoyance]

If they don't and they simply treat this penalty payment as an additional tax, the EU, will start doing more painful things.

Would Microsoft like:
1) Their assets (IP rights, buildings, stock they own, etc.) being put on sale, or (worse) frozen? (you might want to add bank accounts to the list if this happens).
2) Crimminal prossecution for upper management?
3) Trade in Microsoft shares being frozen?

The shareholders won't like any of these.

Trust me, if Microsoft doesn't change its behavior after getting this pennalty payment, they're in for a world of hurt... and the damage from that may very well be irreversible.

Re:Just dumb

[erroneus]

Consider this:

Microsoft with its illegal monopoly abuse practices seems to think it can ignore the problem away like a bad dream. The EU has its own monopoly over who can do business in the EU. They have every right to do what they are doing as they were voted (I assume) into office by the people. And let's face it -- with Microsoft refusing to comply, it is going to have to come to a head where one side or the other will have to push their hand. If you ask me, this is what I'd do (not that they will):

I would accept that Microsoft is not going to pay. So I would grant the EU citizens and businesses a carte blanche to use any and all Microsoft software without paying licenses for a period deemed long enough to migrate to something else... whatever it may be. Moving away from Microsoft should not hurt the people that Microsoft has been hurting. This should be a measure to ease migration rather than to encourage illegitimate use. (It could backfire and a bunch of unpaid copies of software go flying about everywhere until no one wants to bother with alternatives... who knows) Would Microsoft allow or attempt to prevent it? I'm pretty sure they would, but the contempt Microsoft is showing the EU courts is pretty bad at this point. Eventually, I foresee very few if any EU folk siding with Microsoft unless they were in some way employed or benefitting from sales of Microsoft products and services. But giving people free, non-prosecutorial access to Microsoft software would certainly get more notice than mere UNPAID monetary fines.

EU: "So go ahead people! Get your free Microsoft software! Here's the torrents! You can use this for the next three years until you migrate to something better." Doesn't that idea just bring tingles? :)

More and more TRUST is becoming a factor with government and business. The people are increasingly losing trust in businesses like Microsoft just as the US people are losing trust in their own government. It's getting messy out there...

Re:this is stupid

[Anonymous Coward]

I don't think Microsoft are completely without choice here! They could just pull out of the European market; so they're not strictly speaking being forced, but are simply being given rules underwhich they must compley in order to trade in Europe.

Bullying you say? Well, I take your point, and I'm not thrilled at over regulation, but on the otherhand is it fair to say that MS are a monopoly and they use closed, proprietry protocols to maintain their monopoly. So in practise, the idea of allowing "natural" competition between MS and (say) Linux distros is never going to work because MS's competition will always have a way larger mountain to climb.... and that is of course, by design; MS put the mountain there in the first place!

Re:WOW, I got a 130 IQ or higher

[Lispy]

Yup. I am myself sometimes amazed by the laziness some people get away with. Basically 25% of my job as tech support consists of reading manuals for devices I know nothing of. The funny thing is, I usually figure it out pretty fast once I read it. The fact that I have to read it for lazy bumps that call techsupport because they don't want to read it themselves pretty much sucks, though: "NO! I haven't dealt with that X345R device either! I am not even smarter than you. I simply read the manual wich you refused to do."

Re:Just a question

[GuyverDH]

No.

I think what he's stating, is that MS will just decide to STOP providing product and services to ANY EU country. At which point, MS believes that the EU will back down, cowering and repeating the mantra of "Sorry, so sorry" over and over again.

Isn't it ODD?

[happy*nix]

Is this the same EU that's been pushing so hard for software patents? Isn't it the purpose of software patents to create/enforce monopolies? Wouldn't it make more sense to heavly restrict software patents, or simplt strip M$ of and patents pertaining to the protocols in question. There are already companies that have figured many MS protocols out, but they still have to pay M$ licensing. A judgement restricting or assigning MicroSoft's protocol specific patents to public domain would probablly do more to open or level the playing field. Especially if thos restrictions / assignments applied to patents files for the next 5 years. my $0.02 2.4 Mil/day seems steep so I'm assuming the kind of arrogance and lying that M$ applied to the US courts did not impress the EU judges at all.

Re:EU should RTFM-American decisions

[Keeper]

The EU ruling was absolute utter bullshit. Microsoft "violated" EU law by including a media player -- a standard feature in Windows since Windows 3.1. The argument was that this was strongarming Real out of the market.

Yes, the EU posterchild victim is Real. The company who produces tries to make it as hard as possible to find the free version of the player on their website. The company bundling masses of spyware in their free product. The company whos product takes over playing all of your file extensions without asking. The company whos product puts itself in your start folder without asking. The company whos product puts a dumbass real icon in your system tray without asking (which takes 15 minutes to find the right option to turn off). The company whos video quality is craptastic. The company who produces a player so buggy it is difficult to watch a movie in. The company who's products user interface is ugly that the XP playschool theme looks like a piece of art.

Do I really need to go on?

Yes, according to the EU, the reason Real "failed" is because Microsoft included a media player that wasn't a steaming pile of shit, and not because Real's player was a steaming pile of shit.

This whole thing is a sham. The EU doesn't give a shit about media players or Real. It was just a convenient excuse.