EU fines Microsoft, insists on new Windows

The European Commission has slapped Microsoft with a Euro 497.2 million (US$613 million) fine for abusing its operating system monopoly.

The European Commission has slapped Microsoft with a Euro 497.2 million (US$613 million) fine for abusing its operating system monopoly. In a statement, it said Microsoft has acted "as a brake on innovation" and harmed both the market and consumers by producing "less choice and higher prices".

The fine fits with earlier predictions. The EC also insisted that within 90 days, the software giant produce a version of Windows without its media player already built in, and that within 120 days it provide its competitors with documentation on how Windows works so others can make software compatible with the ubiquitous operating system.

It has not ordered the source code be opened up however, saying that it "is not necessary to achieve the development of interoperable products".

According to the statement, just released and available here: "The European Commission has concluded, after a five-year investigation, that Microsoft Corporation broke European Union competition law by leveraging its near monopoly in the market for PC operating systems onto the markets for work group server operating systems and for media players."

It says this behavior is still ongoing, and competition commissioner Mario Monti states quite clearly what he thinks of Microsoft's behavior. "Dominant companies have a special responsibility to ensure that the way they do business doesn't prevent competition on the merits and does not harm consumers and innovation," he said, adding, "Today's decision restores the conditions for fair competition in the markets concerned and establish clear principles for the future conduct of a company with such a strong dominant position."

The whole, massive case is then laid out in simple terms: "Microsoft abused its market power by deliberately restricting interoperability between Windows PCs and non-Microsoft work group servers, and by tying its Windows Media Player (WMP), a product where it faced competition, with its ubiquitous Windows operating system.

"This illegal conduct has enabled Microsoft to acquire a dominant position in the market for work group server operating systems, which are at the heart of corporate IT networks, and risks eliminating competition altogether in that market. In addition, Microsoft's conduct has significantly weakened competition on the media player market.

"The ongoing abuses act as a brake on innovation and harm the competitive process and consumers, who ultimately end up with less choice and facing higher prices."

You can't get much clearer than that, and the EC has said it will appoint a Monitoring Trustee to make sure that Microsoft keeps its side of the bargain including that "the two versions of Windows are equivalent in terms of performance".

Speaking after the statement was released, Monti said the fine was less important than the remedies and legal precedent set, and represented 8% of Microsoft's EMEA turnover. The EC is allowed to fine a company up to 10 % of its turnover.

The statement also mentions that "Commission decisions can be appealed to the European Court of First Instance in Luxembourg", and you can bet that is exactly what Microsoft will do. However, Monti told reporters that he is confident the ruling will stand up to any appeal Microsoft might lodge.

Microsoft responded sulkily just an hour after the announcement, claiming that the deal it had suggested — where another three media players would have been bundled with Windows — was better for European consumers.

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