Microsoft – they just fined ‘em again – $357m
After many years of wrangling with the DoJ, in 2002 Microsoft agreed to a watered down ruling that ordered it to share information more openly with its competitors and stop abusing its monopoly. Or so everyone thought, as usual Microsoft consented but did not deliver, so in May of this year a district judge extended the ‘watch period’ to end in 2009.
Effectively Microsoft blew a raspberry at the US judgements and dragged its feet on implementing, figuring (quite rightly) that under the helm of George Bush the USA would expect a powerful all conquering Microsoft rather than a split up Microsoft – the gambit worked and now Microsoft is pretty much able to do what it wants.
We say ‘pretty much’ because over on the other side of the Atlantic storm clouds were brewing for Microsoft as well. At the same time as the US enquiry into Microsoft, the European Commission started an enquiry, prompted by companies like Sun and Real Networks. Nobody really took notice of the enquiry until the US judgement effectively died a death under Mr Bush’s government – then all eyes (and we expect lawyers) turned to the EC as the last hope for the Microsoft bashers.
They were not to be disappointed, in 2004 it was found that Microsoft was guilty of abusing its dominant market position in Europe and required the company to share information with rivals. The European Union contends that the information Microsoft has supplied so far is inadequate – and a deadline of 18th July for Microsoft to cease its anti-competitive behavior is looming.
Fines so far owed amount to $634m for anti competitive behavior, $575m for lower level fines backdated and now it will increase the fines to a level of $3.82m per (hmm we make that a cool $1.4bn per year). To paraphrase Ronald Reagan ‘ a billion here, a billion there, and soon you’re talking about real money.
The latest fine today of an additional $357m ups the stake greatly for Microsoft who immediately announced that they would launch an appeal.
EU Competition Commissioner Neelie Kroes said – I regret that, more than two years after the decision … Microsoft has still not put an end to its illegal conduct, I have no alternative but to levy penalty payments for this continued compliance. No company is above the law.
Kroes also went on to say that she had warned Microsoft that it had to take care to avoid antitrust problems with its new operating system Vista, which will include an Internet search and a PDF-type document reader that could pose problems for current rivals.
Kroes was unrepentant, saying the independent monitor appointed to supervise Microsoft’s revision of the documents had reported that only half of 70 documents were in a fit state. When the EU made its decision on June 20, only one was suitable, he had told her.
As we’ve said before, Microsoft has become a lumbering dinosaur with no ability to innovate or create new markets. It has become a symbol of malaise, of inertia and of sloth – this is reflecting in every aspect of the company, from stagnant share price through to constant litigation.
It needs to focus on real innovation – perhaps now is the time to reconsider splitting Microsoft up, just as the DoJ wanted all those years ago.