Microsoft faces record fine from EC

Microsoft has been hit with a record $600 million fine from the European Commission and told it must sell different versions of its Windows operating system after being found guilty of anti-competitive behaviour.

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By  Peter Branton Published  March 24, 2004

Microsoft has been hit with a record $600 million fine from the European Commission and told it must sell different versions of its Windows operating system after being found guilty of anti-competitive behaviour. The company has already said it will look to appeal against the decision, which was widely expected after talks between it and the EC competition commissioner Mario Monti collapsed last week. Monti said then that he would make a decision that was best for “competition and consumers”. The issue revolves around Microsoft’s bundling of its Media Player software with its Windows XP operating system. While Microsoft has contended that stripping Media Player out of the OS would affect its performance, competitors said that the company’s dominant position in the OS market gives it a monopoly advantage in the media player market. The EC has now decided this is the case. “The Commission has taken the decision that Microsoft has abused its virtual monopoly power over the PC desktop in Europe,” Monti said today. As well as fining the company 497 million euros, the largest fine ever imposed in any European competition case, the EC has said that Microsoft must now supply alternative versions of Windows, one that includes Media Player and one that does not. It has also imposed conditions on Microsoft that will prevent it from giving PC manufacturers a discount on the bundled version. It has been given 90 days to comply with this. While hardly loose change, the fine falls short of the 10% of Microsoft’s revenue that the EC could have imposed, and is easily coverable by Microsoft’s huge cash reserves. However, it is the issue of providing alternative versions of Windows that will concern the company. Microsoft has fought hard any attempts to prevent it bundling additional features in Windows. Microsoft responded quickly to the decision, saying that it will seek legal review in the European Court of First Instance in Luxembourg. Such a move could take years to complete, and Microsoft is expected to ask that the Commission’s proposed remedies be suspended until then.

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