In July 2012, Microsoft publicly admitted that it fell short in adhering to a 2009 European decision to provide Windows users with a browser choice screen. Today Microsoft has found out just how much their oversight will cost them and it’s not going to be cheap.
The European Commission has imposed a 561 million EUR fine (approximately $731 million US) on Microsoft for violating the browser choice agreement of 2009. The Browser Choice Screen (BCS) was legally agreed to by Microsoft in 2009, providing European Windows users with a screen that enables them to choose which web browser(s) they want to install in addition to, or instead of, Microsoft’s browser Internet Explorer. Microsoft began to officially roll out the BCS in February of 2010 to Windows XP, Windows Vista and Windows 7 users in Europe through a Windows Update.
Microsoft’s July 2012 disclosure revealed that BCS was not included in Windows 7 Service Pack 1, due to ‘technical error’. At the time, Microsoft noted that as many as 28 million PCs running Windows 7 SP1 potentially did not have the required BCS component.
In a release, issued this morning in Brussels, the European Commission stated that Microsoft failed to roll out the browser choice screen with its Windows 7 Service Pack 1 from May 2011 until July 2012. According to the Commission, 15 million Windows users in the EU therefore did not see the choice screen during this period.
“In 2009, we closed our investigation about a suspected abuse of dominant position by Microsoft due to the tying of Internet Explorer to Windows by accepting commitments offered by the company,” Joaquín Almunia, European Commission Vice President in charge of competition policy said. “Legally binding commitments reached in antitrust decisions play a very important role in our enforcement policy because they allow for rapid solutions to competition problems.”
Almunia added that antitrust decisions require strict compliance and non-compliance is a very serious infringement.
Though Microsoft failed with Windows 7 SP1 to provide the BCS, the European Commission noted that the effort to provide browser choice had previously been effective. According to the Commission, as of November 2010, 84 million browser were downloaded via the BCS, providing users with alternatives to Internet Explorer.
The fine against Microsoft is a first for the Commission. Never before has the European Commission fined a company for non-compliance with an antitrust decision. In terms of the amount of the fine, the Commission noted that it needed to, ‘…ensure a deterrent effect of the fine..”
Challenges against Microsoft’s desktop dominance and its ability to potentially hinder competition in the browser space go back over a decade to the Netscape era in the US. The now defunct Netscape argued in 2002 that Microsoft used its desktop position to squeeze the Netscape Navigator browser out of the market. Microsoft ended up paying Netscape’s owner AOL, $750 million in 2003 over the affair. Today Netscape’s successor, Mozilla, is one of the browser choices available that competes against Internet Explorer in the U.S and on the BCS in Europe.