Microsoft fined $731m by European Commission over web browser choice

http://www.bbc.co.uk/news/technology-21684329

by paulsilver • 13 years ago

76 122 13 years ago

bbc.co.uk

youngtaff4• 13 years ago

It's completely crazy.

We've accepted browsers are part of the OS for a long time, what's next fining Apple for not promoting Mozilla or Chrome on iOS?

robin_reala2• 13 years ago

This fine is the outcome of repeated failures on MS’s part to properly implement court-ordered reparations, rather than a direct fine required by the original judgement.

youngtaff4• 13 years ago

Yes but the original judgement was wrong too - politically motivated you might say

masklinn8• 13 years ago

> It's completely crazy.

There's nothing crazy about it.

> We've accepted browsers are part of the OS for a long time

We've accepted that browsers are necessary, the EU seems to have not accepted an OS natural monopoly can be leveraged into a browser monopoly. Sounds perfectly sane, and a good thing.

> what's next fining Apple for not promoting Mozilla or Chrome on iOS?

Apple does not have a monopoly marketshare, which lead to the original decision which Microsoft then broke: http://en.wikipedia.org/wiki/European_Union_Microsoft_compet...

qntmfred• 13 years ago

they did on iOS (for a while). Safari is bundled with iOS

zura• 13 years ago

Then why stop at browsers?

Why not do the same thing with AV, audio players, text editors, file browsers, CD/DVD burners, etc... ?

kawsper• 13 years ago

When Apple have a monopoly, they will be part of these rules as well. As soon as you enters monopoly status in the EU, there is certain rules and regulations that you need to comply with.

masklinn8• 13 years ago

> As soon as you enters monopoly status in the EU, there is certain rules and regulations that you need to comply with.

So is it in the US as well.

pessimizer• 13 years ago

>We've accepted browsers are part of the OS for a long time

Where? You're making that up.

youngtaff4• 13 years ago

IE has been bundled in Windows since XP (Win2K even?), Safari has been part of OSX since 2003

Every phone has a browser, and many did before the iPhone launched in 2007 (even if all they had were crappy WAP browsers)

tomp5• 13 years ago

I think more companies should be fined like this, as a percentage of their anual revenue. Except that I would further increase the percentage - up to 50% or even 100%.

It's very simple: citizens go to jail, companies can't; so we have to make them pay, a lot. When fines are a fixed amount, the corporations have to simply earn more by committing the crime than they would have to pay if caught; banks are very adept at playing this game.

Tichy2• 13 years ago

So you would send people to jail for not giving dumb users a browser choice that is only going to confuse them anyway?

slevin063• 13 years ago

that is upto the court to deicde, tomp got a point that since companies cannot be jailed, they should be fined a percentage of their revenue!

tomp5• 13 years ago

Laws should be followed. If laws are bad, you should change the laws, not disregard them.

learc832• 13 years ago

>committing the crime

If a someone in a corporation is actually committing a crime , then, yes they can go to jail.

If they have committed some kind of civil offense or if it's a criminal offense with no jail term attached then they don't go to jail. There's nothing special about corporations that prevent the people in charge from serving jail time.

lifeisstillgood3• 13 years ago

Serving time for a purely corporate offence is very very rare. Health and safety negligence is most common, but even the horse war scandal in Europe (where unfit horses were sold as beef and then into ready meals) it's unlikely and people there committed fraud as part of course of business

tomp5• 13 years ago

In many cases, it's much easier to prove that a corporation did something illegal than it is to research who exactly in the corporation was responsible (except for the CEO, of course, but to hold the CEO criminally liable for everything a company does would be too open to abuses).

brg10072• 13 years ago

This fine is plain stupid. Why EU doesn't fine Google for the same thing on Android. Android is in a monopoly position in EU and I do not saw any broswer choice screen when I first start my Android phone.

arethuza2• 13 years ago

Android's 61% market share in Europe is hardly a monopoly:

http://www.nasdaq.com/article/apple-raises-market-share-to-5...

lifeisstillgood3• 13 years ago

The browser choice option was merely one agreed solution to the problem that as owner of the ecosystem (windows) MA was not letting any other browsers in.

The highly competitive marketplace for mobile devices gives you as a consumer a wide variety of choices of operating system, and each operating system (apart iOS) is adjusted by the operator to best fit their idea of market

You can choose devices, you can choose different versions and setups of android. There is a competive market

The fact that its not free as in speech is not the problem (it should be but)

tomp5• 13 years ago

Well, the original ruling may have been stupid and might have become irrelevant by now. But the fine is very reasonable: MS didn't do what the courts ordered it to do. Plain and simple.

masklinn8• 13 years ago

> Android is in a monopoly position in EU

Not even close. It's in a majority position but nowhere near a monopoly.

Although it can probably be considered to be a "dominant position", but then come the next part:

1. Has somebody complained

2. Is "Android" using its dominant position to distort the market

martinced• 13 years ago

You're seriously confused as to what a monopoly is and what a monopoly implies.

There's nothing wrong with having a monopoly. What is, however, illegal is to abuse your monopoly to keep and extend your monopoly to other domains.

Btw Google / Android isn't near anywhere a monopoly in the smartphone / tablet market.

What would be illegal would be, for example, Google using its search engine to eliminate any mention of the word "Apple" and of the "apple.com" domain or, worse, only allowing access to negative criticism of Apple products. But they aren't doing that (at least not that we know of).

On the contrary MS has been officially judged has being a monopolist abusing its power to try to keep and extend its monopoly. Both in an US judgement and in an European judgement.

Heck, even selling the Xbox at a loss for years and years while living on monopoly money is a dubious way to enter a market (but personally I wouldn't mind if MS faded into irrelevancy and had only its Xbox division doing fine ; )

flexie2• 13 years ago

Listen, 50 percent or 100 percent of revenues - that easily leaves you with a bankrupt company. That's not in the interest of consumers.

Microsoft was fined around 1 percent of their global sales for a violation of the terms of a kind of a settlement in an old competition case (antitrust case). Microsoft already knew that if they violated the terms they would be fined up to 10 percent of their global revenues: http://europa.eu/rapid/press-release_IP-09-1941_en.htm?local...

Microsoft mostly complied with the terms of the settlement, but not entirely as the OP describes. In that light the 1 percent fine is probably not way off.

CurtHagenlocher2• 13 years ago

That's about $50 per user believed to have been affected by the error.

netrus3• 13 years ago

It's a high fine, but on the other hand, EU did not ask for much. I am sure MS will spend some more energy on implementing court orders in future.

meaty6• 13 years ago

I understand the premise of the fine, but how is this supposed to help the consumers and businesses who now have to foot the $50 bill per seat?

robin_reala2• 13 years ago

By that logic no company should ever be fined as it hurts their users.

netrus3• 13 years ago

If MS raises its prices, it will weaken their market position - that's the punishment for their malbehavior.

Zirro2• 13 years ago

It's meant to punish Microsoft for failing to comply with the ruling, rather than compensate other browser-makers for the users potentially lost.

deelowe• 13 years ago

Isn't this the primary difference between civil and criminal law? Additionally, isn't this a civil case? It would seem to me that the entire point of the trail would be to deal with the lost compensation/opportunity cost issue.

devcpp2• 13 years ago

They probably made much more out of their previous monopoly anyway.

lucb1e4• 13 years ago

I wonder what they do with this money actually. Same as is done with tax money?

adlpz2• 13 years ago

Yep, I it does.

lucb1e4• 13 years ago

Okay, thanks

Zirro2• 13 years ago

The money paid to the European Court goes back into the EU budget.

lucb1e4• 13 years ago

Okay, thanks for the reply

nolok• 13 years ago

And lowers the amount member states have to pay (it does not increase the budget)

flexie2• 13 years ago

Here is the European Commission's press release about the decision: http://europa.eu/rapid/press-release_IP-13-196_en.htm

meaty6• 13 years ago

What motivation have Microsoft got to pay this?

lutusp• 13 years ago

The right to continue to do business in the EU? That's what's at stake.

meaty6• 13 years ago

I don't think they can just cut off every Microsoft consultancy, every Windows user and throw them out of the EU.

If they did, I'd be heading to Brussels with a pitchfork along with about 100 other people at my company.

vidarh4• 13 years ago

Getting to decide by what means they pay it, rather than have EU courts order some of their assets confiscated.

jermaink• 13 years ago

For now, it´s "just" browser applications.

paulsutter• 13 years ago

It's only a small percentage of the taxes that Microsoft has dodged, er, "structured away". Microsoft can pay the fine using their cash that's stranded overseas without having to repatriate it back to the US and pay taxes on it.

mmahemoff• 13 years ago

What does this mean for ChromeOS or Firefox OS? I'm seriously curious how the legal system considers them in light of this and why MS hasn't mentioned them (to my knowledge) in their defence.

sgift2• 13 years ago

Neither ChromeOS nor FirefoxOS have a majority market share in the OS market that they use to push competitors out of the browser space. No problems for them.

ioulian• 13 years ago

That's indeed my thought, why only Microsoft? Apple should also give that choice to their OSX users.

masklinn8• 13 years ago

> That's indeed my thought, why only Microsoft?

Abuse of a natural monopoly.

> Apple should also give that choice to their OSX users.

Stuck at 10% global marketshare (probably below that in the EU), there is no risk Apple will be able to leverage a dominant OS position they don't even remotely have into market distortions in related domains.

lifeisstillgood3• 13 years ago

Simple - they do not have de facto market dominance

When they do and take actions that are detrimental to the proper functioning of a free market they will get fined as well

Microsoft is not evil, not by any normal definition of the word, but they are using power to keep power. That's normal, and that's why anti-trust laws are draconian - something is needed to equalise the odds

pepperp3• 13 years ago

Why don't they start fining car manufacturers for not providing customers with a choice of seats made by other manufactures? Antitrust law in the EU is a load of bs, coming from someone who uninstalls IE first thing after installing Windows.

drivebyacct2• 13 years ago

You "uninstall IE" eh?

pepperp3• 13 years ago

Or more related, why can Microsoft bundle Paint and Outlook without providing alternate graphic programs and mail clients?

CurtHagenlocher2• 13 years ago

Practically speaking? Because no EU company that sells a paint program or email program has filed a complaint. This action was started by an Opera complaint to the EU -- not because the EU was looking around for things it didn't like.

MichaelApproved3• 13 years ago

You're misunderstanding. The problem is that Microsoft is using its OS monopoly to try and create another one. These special anticompetetive triggers only come into effect when the company has a monopoly.

To be more clear, there is noting illegal about HAVING a monopoly. It's what you do WITH a monopoly that matters. If you don't have a monopoly, you're much less restricted with what you can do.

To correct you analogy, it would be if one car company manufactured 90% of the cars and decided to sell the cars with its own tire brand.

pepperp3• 13 years ago

Fair, I get you. I still wouldn't have a problem with the corrected analogy. Firstly, I consider the web browser an integral part of an OS even if you have the choice to replace it, so it's not creating a further monopoly, it's just part of the package (just like tires and the body of a car).

But more importantly, problems caused by some monopolies (e.g. extortion), and monopolies themselves, have historically been the RESULT of government intervention. Other web browsers obviously can compete considering IE is not the most widely used browser anymore.

powertower3• 13 years ago

Since when couldn't you just open IE and download your browser of choice?

The browser ballot is BS imposed by bureaucrats.

mda4• 13 years ago

Microsoft will probably counter-fine by raising its prices by 1€ in EU. Europe will happily pay for it.

netrus3• 13 years ago

If they can raise their prices by x without harming their business, why haven't they done it already?

mda4• 13 years ago

It harms them, but only in the long term. But if a company is fined, increasing prices is the easiest way to balance the numbers.

Microsoft already started hiking prices for some of the enterprise products, and for now they can afford this.

bnegreve2• 13 years ago

I disagree with this kind of reaction:

1. I don't think it's useless, when companies raise their price they loose customers so Microsoft will probably be more careful next time.

2. If it is useless in practice, we should change the law but surely not let them do what they want, just because it's useless.

mda4• 13 years ago

So they fined a company which controls almost entire European Government infrastructure. Company screws up, gets fined, things will continue business as usual, Microsoft still can do whatever they want, at least in the medium term. What EU could do is to actively try to reduce their dependency to a single firm, they can check the future deals, look for alternatives. Then they can have an upper hand and then no companies would screw up a simple thing like this.

omd• 13 years ago

Ah, it's the "Don't upset corporations or they will punish us with infinite price hikes" mantra.

If they raise the price by €1 and for the sake of argument we assume a net profit of 50%, they would have to sell 1.1 billion packages to recoup the fine (I don't think Microsoft has sold that many software products in their lifetime, but it's a fun little thought experiment). 1.1 billion Windows 8 licences at €280 a piece is €308 billion revenue of which the corporation taxes will flow back to the EU members. It's a win-win for our tax payers!

mda4• 13 years ago

€1 was just figure of speech. (Still, Governments pay for a ton of Microsoft products; Ms office, Windows, Exchange mailboxes, Sharepoint licenses, SQL server licenses etc. etc. How much money do you think Ms makes from EU governments in one year? in 5 years?)

High software prices indeed harm tax payers. There is no win-win.

mechatronic• 13 years ago

I think the EU should stop collecting taxes and get American tech giants to fund the public service with spurious fines.

zacharyvoase• 13 years ago

EU competition law is a completely different beast from US antitrust law, and whilst I disagree with both forms, the EU definitely suffers from more of a Tall Poppy Syndrome: if you're a market leader with a disproportionate share of the market, it's almost assumed that you're acting in bad faith, and it's up to you to prove you're promoting 'fairness' and 'competition'.

If anything is 'anti-competitive' it's rulings like these, which punish people for producing quality software and increase the uncertainty of doing business in the EU.

There's a good comparison of the two systems over here: http://www.iie.com/publications/chapters_preview/56/10ie1664...

tm4n• 13 years ago

This still seems rather unfair, why are other proprietary operating systems not obliged to incorporate a similar feature? It's Microsoft own operating system and they should be allowed to incorporate whatever piece of software they'd like, albeit to a reasonable extent.

On the other hand, I do find it weird there are no repercussions like this for Windows' new secure boot "feature".

masklinn8• 13 years ago

> why are other proprietary operating systems not obliged to incorporate a similar feature?

Because "proprietary" is irrelevant, the operative word relevant to the original judgement was "monopoly". And more precisely abuse of a natural monopoly.

> It's Microsoft own operating system and they should be allowed to incorporate whatever piece of software they'd like, albeit to a reasonable extent.

If they were sitting at a 10% desktop OS market share that would be the case. But over the last ~150 years, natural monopolies have come to be seen as too dangerous (due to their ability to leverage an essentially impregnable stronghold into dominance in other domains through "legal" market distortions) to be left to play by the normal rules, so many first-world countries have additional rules for monopolistic entities to follow.

In the EU, companies in dominant positions have "a special responsibility not to allow [their] conduct to impair competition on the common market".

brudgers• 13 years ago

In my opinion this sheds some light on Sinofsky's departure. That's quite a fuck-up and it happened on his watch.

sbennettmcleish• 13 years ago

Whilst it is Microsoft with bags of money and all that, I don't really see how such a huge fine (even for M$) is warranted.

Yes, they stopped offering the browser choice, but at what point did someone from EU-HQ contact MS-HQ and tell them they'll be fined if they don't put it back in? Surely it would only take a few weeks at the most to actually re-instate the "feature" once they were threatened with a huge fine.

It might have been better for Microsoft to have actually been forced to give money to the other browsers to promote their products, or alternatively, just bundle Firefox/Chrome with Windows and be done with it.

devcpp2• 13 years ago

They had been threatened a few times before implementing it. It's about time we stopped to play this game and make it clear stuff like that won't be tolerated at all.

It wouldn't have been better for Microsoft. They know very well that each product they establish as a monopoly increases their chance of coming back as an all-around industry leader. Actually, I'd be willing to bet this wasn't a "technical error". I've never seen features just unexpectedly disappear out of any piece of software.

gsnedders• 13 years ago

There was an explicit order in the previous anti-trust ruling that required it. The ruling stated they could be fined up to 10% of their revenue if they failed to comply. They did not comply. They were fined.

It's not like they weren't told about it first.

Someone• 13 years ago

Yes, I stopped obeying the speed limit, but at what point did someone contact me and tell me I'll be fined if I don't stop obeying the speed limit? Surely it would only take a few weeks at the most to actually make me obey the speed limit once I were threatened with a huge fine.

Do you think that makes sense?

kabdib2• 13 years ago

Another trip to the Microsoft piggybank.

yread• 13 years ago

This thread seems to be heavily flagged, but nobody mentions in their comment that it's irrelevant or that they've downvoted or flagged it. Any of the flaggers would care to share their reasons?

marknutter3• 13 years ago

This fine would only make sense if Microsoft prevented users from installing a different browser.

Consider an analogy: let's say there's a power company who runs a monopoly on generating electricity. They also provide natural gas services to their customers. There is, however, a bunch of other smaller natural gas companies just a phone call away that people can buy natural gas from; all you have to do is call them and have a technician come and flip a switch in your home. Is it really harmful to the consumer if the power company with the dominant market position doesn't give their customers the phone numbers of the companies competing with its natural gas division? No.

toyg4• 13 years ago

You don't understand the context. MS did indeed prevent OEMs from installing another browser; it's like they were forcing house builders (which have to use electricity) to connect only their own gas services to new houses.

And for that sin, MS will keep paying for a long time; they're basically an ATM for the EU now. This is not great but hey, they do have a history; once a felon, forever a felon, so to speak.

marknutter3• 13 years ago

But that doesn't fit with the analogy. Downloading and installing a third party browser is next to effortless. Who cares if the OEMs didn't install them? In my analogy the third party gas companies had to send out a technician to install their service, but could presumably do that free of charge to entice the customers to switch to their service.

dworrad• 13 years ago

I'm sorry but what about the ipod, iPad, iPhone.... Can't remember them giving me the choice of where I want to buy media. This must be a joke?

theklub• 13 years ago

Microsoft is stupid for making this mistake but the fine is complete BS in the first place. I think it would make more since to fine them over search engine options since that's where the money is actually made. If someone can explain how money is made off the browser alone then please enlighten me.

Microsoft fined $731m by European Commission over web browser choice

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