From Sunday Telegraph-UK
Brussels fines Microsoft record £330m
By David Litterick (Filed: 25/03/2004)
The European Commission has fined Microsoft a record €497m (£330m) after it found the software giant guilty of using its near monopoly to stifle its rivals. Competition commissioner Mario Monti also ordered it to change its behaviour to enable rivals to compete.
Commissioner Mario Monti
The judgment means Microsoft must separate its Windows operating system from its Media Player program within 90 days. It also has 120 days to provide rivals with vital data enabling them to produce computer servers which can work alongside Windows software.
The Seattle-based company denies it abuses its overwhelming dominance to crush competitors and has already vowed to appeal the verdict at the European Court of Justice. Mr Monti said the sanctions laid down a clear marker for the future conduct of Microsoft, which escaped fines in a US anti-trust investigation.
Microsoft's senior vice-president and head lawyer, Brad Smith, argued the verdict was "unwarranted and ill-considered".
The requirement to offer a stripped-down version of Windows in Europe that excludes Media Player could play havoc with the operating system, he warned.
"Today's decision is a setback not only for Microsoft but ultimately for our entire industry and especially for consumers." indicated it would ask for the fine and remedies to be suspsended until an appeal was heard.
The fine equates to about 8pc of Microsoft's revenues from Europe, the Middle East and Africa from the products concerned.
However, the penalty is far lower than the fine of 10pc of worldwide revenues that it could have imposed. Even so, Microsoft's rivals hailed the decision.
"It is fundamentally significant because the Commission has formally declared that Microsoft's media player bundling strategy is illegal and has established the guideposts for future bundling cases," said Bob Kimball, vice president and general counsel at Real Networks, which makes rival audio and video software to Media Player.
Sun Microsystems, which brought the initial complaint that it was denied information which would let it produce servers compatible with Microsoft's Windows software, also welcomed the announcement.
Industry experts questioned whether the decision would have the desired effect. Dan Kusnetzky, vice-president of systems software at IT research company IDC, said computer makers, even given a choice, would most likely carry on pre-installing Windows with the Media Player to avoid the risk of programming conflicts.
Investment analysts also said Microsoft's business would not be materially affected.
Rick Sherlund, of Goldman Sachs, said: "The only issue we see is whether Microsoft will be under some constraints going forward in adding new things to Windows."
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