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Microsoft Appeals Massive EU Fine

In a closely-watched case, Microsoft moved this week to put the last of its European anti-trust contretemps behind it — and tried to save a boatload of money at the same time — when it appealed the last fine, one for approximately $1.35 billion, levied against it late last decade by the European Commission. According […]

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SJJ

Stuart J. Johnston

May 25, 2011

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In a closely-watched case, Microsoft moved this week to put the last of its European anti-trust contretemps behind it — and tried to save a boatload of money at the same time — when it appealed the last fine, one for approximately $1.35 billion, levied against it late last decade by the European Commission.

According to published reports, Microsoft’s (NASDAQ: MSFT) attorneys argued that the fine was undeserved and excessive.

The arguments were presented to the EU’s Luxembourg-based General Court — part of the European Court of Justice — on Tuesday.

The fine, the largest ever at the time, was imposed against Microsoft in 2008 by the EC— the European Union’s (EU) executive branch — for not immediately complying with a 2004 ruling that it had used its market dominance to block competitors in the workgroup operating system arena from building products that integrated with Microsoft products by withholding interoperability documentation.

Later that year, Microsoft announced it would appealthe fine.

“The fine related to the price Microsoft had proposed for one of several forms of licenses for the technology Microsoft was required to make available by the Commission’s 2004 Decision,” Jesse Verstraete, Microsoft senior EU communications manager, told InternetNews.comin an emailed statement.

The fine was levied because the EC commissioners decided that the rates that Microsoft was asking competitors to pay for the interoperability information were excessive. Microsoft did eventually settle on licensing terms amenable to the EC but not in time to avoid the fine.

In court Tuesday, Microsoft argued that the EC had not given the company adequate guidance as to what the commissioners thought were fair licensing terms, and said that if the EC had been more forthcoming, the disparity would never have happened, according to the published reports.

The case is being closely watched by other U.S. technology firms.

For example, in 2009, the EC fined Intel (NASDAQ: INTC)an even larger amount — approximately $1.45 billion — for misusing its dominant market position to block competitors, including AMD, from access to European PC makers.

Additionally, in December 2010, the EC opened a probeinto allegations that Google (NASDAQ: GOOG) misused its market dominance by lowering the page ranking of search competitors in its search results.

Microsoft, meanwhile, has settled all of its outstanding issues with the EC. The majority of that came about in December 2009, when Microsoft agreed to let Windows users in the EU choose which browsers they want to use on new PCs by presenting them with a “choice screen” the first time a new PC is started up.

According to reports, the EU General Court typically takes six months to more than a year to decide appeals. If it rules against Microsoft, the company can appeal to the EU’s top court — the European Court of Justice — but only on issues of law.

Stuart J. Johnston is a contributing editor at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.