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EU fines Microsoft 561 mn euros for web browser choice

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(Globalpost/GlobalPost)

The EU fined Microsoft 561 million euros ($730 million) Wednesday for failing to provide customers with a choice of Internet browser, as promised, but ran into criticism it had not done its job properly by allowing the US giant to monitor its own commitments.

EU Competition Commissioner Joaquin Almunia said this was the first time a company had been fined for failing to live up to commitments it had made to satisfy an EU complaint, making it a "very serious infringement."

Almunia stressed that in 2009, Microsoft had given a cast-iron vow to offer clients a web browser choice through to 2014 after complaints about the then-dominance of its Windows Explorer product.

"Legally binding commitments reached in anti-trust decisions play a very important role in our enforcement policy because they allow for rapid solutions to competition problems," Almunia said in a statement.

"Such decisions require strict compliance. A failure to comply is a very serious infringement that must be sanctioned accordingly."

A Commission probe showed that during the roll-out of Windows 7, Microsoft failed to offer the choice screen for the period May 2011 to July 2012, affecting some 15 million computer buyers.

Asked several times at a press conference why the Commission had not picked up on the problem at the time, Almunia said that it was Microsoft itself which was in charge of monitoring its commitments and reporting to the EU.

"The monitoring trustee was Microsoft ... in 2009 we were perhaps more naive than we are today," he said, adding that the Commission was only made aware of the problem after a complaint since the company did not mention it.

In future, such commitments would be monitored much more closely, said Almunia, who took up his post in 2010.

Officials will have to be "very careful about how they design the monitoring of (company) commitments … I don’t want this to be repeated in the future," he said.

Wednesday's action was intended to "deter those who may be tempted in the future not to meet the commitments they made," he added.

Microsoft acknowledged the failure on Wednesday, which it put down to technical problems.

"We take full responsibility for the technical error that caused this problem and have apologised for it," the company said, adding that it would do all in its power to avoid any repeat.

From July 2012, Microsoft complied with the web choice requirement and Almunia said the company had indicated it would make up the 14 months of lost time.

The EU has had a series of disputes with Microsoft, imposing a first fine of 497 million euros on competition grounds in 2004.

In 2008, it had pay to 899 million euros in 2008, subsequently reduced to 860 million, for failing to comply with an order to share product information with rivals so that their software could work with Windows.

Under EU law, a company found to have breached commitments made to resolve competition cases can face a fine of up to 10 percent of annual sales. In 2012, Microsoft posted sales of just under $74 billion.

Wednesday's decision comes as the Commission reviews proposals from Internet giant Google aimed at ending a probe into its dominance of online search advertising platforms.

Critics say Google controls about 70 percent of the Internet search market, and the advertising that goes with it.

The US regulator said last month it lacked a legal basis to bring a case against Google but had won commitments from the company to end its "most troubling" practices.

Almunia said the EU probe into Google was continuing and declined to be drawn further.

The single biggest EU anti-trust fine was against computer chip-maker Intel at 1.06 billion euros in 2009.

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http://www.globalpost.com/dispatch/news/afp/130306/eu-fines-microsoft-561-mn-euros-web-browser-choice-1