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EU Fines Microsoft $1.3 Billion 699

Posted by kdawson
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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EU Fines Microsoft $1.3 Billion

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  • Well... (Score:5, Funny)

    by cosmotron (900510) on Wednesday February 27, 2008 @09:41AM (#22572306) Homepage Journal
    That's 1.337.
    • Re: (Score:3, Funny)

      by cp.tar (871488)

      That's 1.337.

      Imagine the awesomeness if that were the desired effect.

  • And what if not? (Score:5, Insightful)

    by mapkinase (958129) on Wednesday February 27, 2008 @09:46AM (#22572376) Homepage Journal
    I wonder what happens if MS ignores that order as well... They won't be able to ban Microsoft products, I guess.
    • Re:And what if not? (Score:5, Informative)

      by asuffield (111848) <asuffield@suffields.me.uk> on Wednesday February 27, 2008 @09:59AM (#22572550)
      The EU will simply take the money by force. Microsoft has assets moving through the EU, in the form of their revenue from sales of their products. The EU will walk in to the retail outlets and take that revenue until they have their money - the money from every copy of Windows and every xbox sold will go directly to the EU, and Microsoft will never receive it. This is the standard method that courts use for extracting fines from recalcitrant corporations - you don't ban their products, you just take their products.

      And they'll keep doing it for as long as it takes.
      • by clickclickdrone (964164) on Wednesday February 27, 2008 @10:42AM (#22573112)
        >The EU will simply take the money by force
        I know it's an alien concept to American's, what with us Eurpeens being commies and all that and American firms usually being allowed to do what they want as long as they grease a few palms but what usually happens is:
        1. A law is enacted
        2. A firm ignores it.
        3. They get fined
        4. They pay the fine.

        In the UK last week a few multi million pound fines got dished out to various big companies (this was from watchdogs rather than the EU though) and it's pretty much a given they'll pay up.
        • Re: (Score:3, Insightful)

          by penix1 (722987)
          The problem I have with fines in general is they do no real harm to companies. The cost of the fine is then funneled back into the price tag of the product and considered a "cost of doing business". It's you and me that get screwed in the end with higher prices to cover losses in fines.

          A more interesting concept would be to have a major portion of the fines go to Microsoft's competetors. It was they who were harmed by Microsoft's actions. Just think how a few hundred million would benefit FOSS projects in E
          • Re: (Score:3, Interesting)

            by timeOday (582209)

            The cost of the fine is then funneled back into the price tag of the product and considered a "cost of doing business". It's you and me that get screwed in the end with higher prices to cover losses in fines.

            No, that's just a scare tactic companies advance to get the public on their side. If it were true, companies wouldn't put up a legal fight to resist fines. The cost of production (including fines) isn't directly related to the retail price. Their price was already whatever they thought would maximi

          • by KevinIsOwn (618900) <herrkevin AT gmail DOT com> on Wednesday February 27, 2008 @04:02PM (#22577678) Homepage
            I've seen this argued in a number of places, including the FairTax book. To an extent it is correct, however this isn't a reason not to fine corporations. Simply put, in non-monopoly situations the free market sets the price, not the corporation. This means that if a corporation is fined and raises prices as a result, its competitors benefit because they do not have to raise prices. If the company that gets fined does not raise their prices, then their margins go down (which means less profits or even possibly write downs).

            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.
    • Re:And what if not? (Score:4, Informative)

      by LinuxDon (925232) on Wednesday February 27, 2008 @10:40AM (#22573084)
      Microsoft WILL comply, or the consequences will be enormous.
      The fines will just keep increasing until they can't afford not to comply. And if they don't pay, bank accounts will be frozen etc etc. If that doesn't do it, the company will eventually be declared bankrupt and their assets will be sold to the highest bidders.

      In contrast to what the MS fanboys say about the subject, they will not get away with non compliance as they did in the US.
      EU politicians *cannot* be bought and they will not be scared by threats of MS leaving Europe. Not that I believe MS would make such a threat, which would be extremely stupid and would make all of their customers run.

      I strongly believe that MS will just pay the fines and start complying and everyone will just be happy in the end. :)
    • Re: (Score:3, Interesting)

      by Yvanhoe (564877)
      It is the first time a company don't respect the orders of this institution (which only has 50 years of age) and this is the biggest fine it ever produced. Nobody knows what would happen if Microsoft was planning not paying but I guess it could be raided by European IRS. I mean it is tax money. Many people who lack a sense of humor are serious about it.

      A ban would be a first as well but I think they'll just keep on doubling the fine every year...
  • From a BBC News article on this: (http://news.bbc.co.uk/1/hi/business/6998490.stm) "Meanwhile, in the world of servers the fight is still on, with a new kid on the block - the open-source Linux operating system - making as strong gains in the market as Microsoft." (bold mine) I mean really.. new kid on the block? who is writing these?
  • by Numen (244707) on Wednesday February 27, 2008 @09:47AM (#22572404)
    I'm a .NET dev, and rather fond of the platform... don't groan too loudly... but even I think this is a good move. I'm glad to see the EU actually prepared to hold large corporations accountable to the law. A pet hate of mine is a legal system that will sanction heavily a private citizen for minor crimes but effectively tut disaprovingly when a large company dumps waste in a river.

    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.
    • by CaptainZapp (182233) * on Wednesday February 27, 2008 @10:03AM (#22572602) Homepage

      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

      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.

    • by K-Mile (906254) on Wednesday February 27, 2008 @10:21AM (#22572806)
      But they do:

      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...
  • by Nikademus (631739) * <`ti.dralla' `ta' `duaner'> on Wednesday February 27, 2008 @09:51AM (#22572468) Homepage
    It's amazing some people find this sum high.
    It just like EU told MS that they can continue infringe on laws as long as they give them about 10% of their benefits.
    If EU wants MS to comply fast, they just have to make a ban on MS products in Europe, so that selling MS products would be considered illegal and fined enough.
    • by stonewolf (234392) on Wednesday February 27, 2008 @10:33AM (#22572992) Homepage
      Not really... Not to stock holders.

      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

  • by Froqen (36822) on Wednesday February 27, 2008 @09:55AM (#22572506)
    MS: 3.87%? [cnn.com]
    EU: Lower
    MS: 2.98%?
    EU: Lower
    MS: 0.5%?
    EU: Lower
    MS: 0.4%?
    EU: BZZT! Too late, we are going to fine you a Billion $s.

  • Did you see that? (Score:5, Interesting)

    by Eggplant62 (120514) on Wednesday February 27, 2008 @09:58AM (#22572536)
    Porcine-mounted aviatrices with huge breasts just flew past my window!!

    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.
    • Re: (Score:3, Insightful)

      by pr0nbot (313417)
      Let's celebrate when the fine has been paid.
    • Re: (Score:3, Interesting)

      by jandersen (462034)
      No need to be surprised here - court cases against large corporations do take long time. The really amazing thing is the fact that many Slashdot comments will actually defend Microsoft's behaviour, as if they were above the law because they have loads of money.

      Perhaps this will awaken people to the fact that in modern society nobody is above - or below - the law.
    • Re: (Score:3, Insightful)

      by gad_zuki! (70830)
      Whats so great here? Is this the principled move you truly think it is?

      Essentially we have a pan-government organization that is demanding one billion dollars to continue to do sale in its realm. This money is not earmarked for social programs or anything that would benefit humanity, but more for bureaucrats.

      The principled thing to do is to say "Your products cannot be sold here for 5 years. Be gone." Instead the EU just took the money. I dont see how the EU is better than MS. They are both attempting to m
  • by Panaqqa (927615) * on Wednesday February 27, 2008 @10:05AM (#22572638) Homepage
    ...to see what the reaction would be if Microsoft indicated that it was simply not going to pay the fines. They could go further and say that attempts to force payment would result in an amount equal to the fines going to pay for moving part of their European workforce to a non-European location. Oh - and those Server 2008 licenses needed to run the European government computing facilities? Not for sale, and by the way, all other support and licensing contracts will not be renewed after they expire.

    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: (Score:3, Informative)

      by Shados (741919)
      Thats what MS used to do. Its not really in a situation to do that anymore though.
    • by apathy maybe (922212) on Wednesday February 27, 2008 @10:29AM (#22572920) Homepage Journal
      It is called being a sovereign government, it means having an army, police, courts etc.

      It means that the EU can decided to confiscate any and all Microsoft property and Microsoft can do fuck all about it. It means that they can simply use those Server 2008 licences, and Microsoft can do fuck all about it.

      If the EU wanted, they could drop Microsoft and develop an OS based around X/GNU/Linux, and screw Microsoft. You have to remember that until this point the EU has played by the rules of the game. But in the EU, the EU writes the rules, and they can change them as and when they like.

      If Microsoft tried to play hard-ball with the EU, they would lose.
    • by cptdondo (59460) on Wednesday February 27, 2008 @10:35AM (#22573018) Journal
      You don't really understand the scale of government, do you? I work for a small (tiny, miniscule, microscopic) government agency. We have maybe 50 or 80 employees. Our budget for next 5 years is in the hundreds of millions (US$). I award contracts worth tens of millions of dollars on a routine basis.

      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.
    • by weber (36246) on Wednesday February 27, 2008 @10:35AM (#22573022)

      Oh - and those Server 2008 licenses needed to run the European government computing facilities? Not for sale,

      Oh - and those licenses, we don't need them: you copyrights are void.
      • by Sycraft-fu (314770) on Wednesday February 27, 2008 @02:57PM (#22576776)
        All the EU members are signatories to the same copyright treaties the US is. Of the many provisions, one of them is that you have to respect copyrights from other nations. That applies in all cases. So if someone in France releases, say, a book in France and only sells it there, someone in the US can't just copy it and start distributing it over here. Doesn't matter that the author isn't choosing to make it available in the US, that's their right. The US still has to obey the copyright.
    • by stonewolf (234392) on Wednesday February 27, 2008 @11:01AM (#22573374) Homepage
      Yeah, it would be interesting to see a major corporation declare itself to be above the law. They already act that way. And MS clearly believes they are above the law. But, they have never made the mistake of publicly declaring that they are beyond the law.

      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
       
    • by A beautiful mind (821714) on Wednesday February 27, 2008 @11:09AM (#22573500)
      Every time MS vs. EU is discussed on slashdot someone drags this stupid argument out of the closet.

      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.
  • by Subm (79417) on Wednesday February 27, 2008 @10:07AM (#22572656)
    1.337 billion just can't be a coincidence.

    It's clear evidence the EU lawyers are leet and MS is suxxxorz who got pwned. I can see the court transcript:

    EU Lawyers: We get signal
    MS Lawyers: What!
    EU Lawyers: Main screen turn on
    MS Lawyers: It's you!!
    EU Lawyers: How are you gentlemen!!
    EU Lawyers: All your base are belong to us!!
    MS Lawyers: ...
    EU Lawyers: 1.337 billion Profit!

    Now that's great justice!
  • by jonwil (467024) on Wednesday February 27, 2008 @10:09AM (#22572684)
    Are there file formats, network protocols, APIs or other items Microsoft have not yet published that the EU wants them to publish? Is the license attached to the ones they have published still not acceptable to the EU? Are there still issues with Microsoft bundling stuff with Windows that the EU doesn't want them to bundle?
  • by Leemeng (970560) on Wednesday February 27, 2008 @10:21AM (#22572814)
    MS would probably want to pay up quick, before the dollar devalues even further...
  • by zerofoo (262795) on Wednesday February 27, 2008 @10:22AM (#22572832)
    It seems that America is losing its ethical way. For the most part, our government's "hands off" approach to regulating businesses and enforcing the law with respect to corporations is coming at a huge cost to the average American citizen.

    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

  • 7.6% (Score:4, Insightful)

    by hkmarks (1080097) on Wednesday February 27, 2008 @10:32AM (#22572982)
    Microsoft's net income was around $14 billion in 2007. Over fifteen months, this charge is only 7.6% of that. It's only around 2% of their gross revenue. It's basically just a little extra tax, from MS's perspective. No mistake, it's still a lot of money, but I wouldn't be surprised if they paid it happily and kept their little monopoly.
    • Re:7.6% (Score:5, Insightful)

      by apathy maybe (922212) on Wednesday February 27, 2008 @11:01AM (#22573384) Homepage Journal
      They don't get to keep their monopoly. They get to pay the fine and change their behaviour or get fined again.

      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.
  • Neelie Kroes (Score:5, Interesting)

    by Kupfernigk (1190345) on Wednesday February 27, 2008 @10:35AM (#22573016)
    European Competition Commissioner [europa.eu]

    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.

  • by Dystopian Rebel (714995) * on Wednesday February 27, 2008 @10:37AM (#22573054) Journal
    Microsoft CEO Steve Ballmer has reportedly responded to the fine announced by the EU by issuing a request for candidates and establishing a vote-soliciation group to replace all elected officials in the European Union with pro-Microsoft officials.

    If successful, it's believed that Ballmer's plan is to rename the European Union to "Microsoft EU Professional".

    In a separate communication, Ballmer told EU officials that Microsoft would send them free MSDN DVDs if they withdraw the fine. "If you choose not to accept our offer," wrote Ballmer, "we reserve the right to pursue all necessary steps to ensure that software customers in Europe are provided with the opportunity to realize the value inherent in our monopoly."

  • by LinuxDon (925232) on Wednesday February 27, 2008 @10:44AM (#22573142)
    Quote: "The amazing thing is that the EU now expects Microsoft to comply and 'close a dark chapter' in their history."

    How can this be considered *amazing*?

    It's the only option they have. They've played their cards and lost, now is the time to just pay the fine, comply with the ruling and move on.
  • Tab (Score:4, Funny)

    by Kamineko (851857) on Wednesday February 27, 2008 @11:38AM (#22573988)
    Microsoft's response: "Just put it on our tab!"

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