A $733M ‘error’ message: EU fines Microsoft over browser-choice deal

Microsoft is again in trouble for failing to give consumers a choice in Web browsers, with the European Union fining the company 561 million euros, or $733 million, for non-compliance with a 2009 settlement. It is the first fine imposed by the EU for non-compliance with a voluntary agreement.

This fine is meant to send a signal to other big companies that fail to hold up their end of whatever bargains they strike with the EU.

“I hope this decision will make companies think twice before they ever think of internationally breaching their obligations or even neglecting their duty to ensure strict compliance,” said Joaquín Almunia, EU competition chief, according to the Wall Street Journal.

Big companies under scrutiny in Europe, of course, include Google. The search giant is talking with Almunia’s office over allegations by its competitors — including Microsoft — that it has abused its dominance in search and advertising, and it has already been asked to change some practices.

Google earlier this year secured a settlement in the United States, avoiding an antitrust lawsuit over accusations that it was favoring its own products and services in search results. (See Google must be feeling lucky: It ducks U.S. antitrust suit with FTC settlement.) While its deal with the Federal Trade Commission includes making changes to its practices, its rivals think Google got off easy, and as GMSV has mentioned before, were looking to Europe to be tougher on the company. (See The Google-FTC deal the day after.)

The EU can fine a company as much as 10 percent of its annual revenue, which for Google could mean about $5 billion because it hit $50 billion in sales for the first time last year. However, the EU has not imposed a fine that large; the New York Times says the biggest fine the EU has imposed was about $1.4 billion against Intel in 2009, over allegations the Santa Clara chip maker strong-armed computer makers and steered them away from rival AMD’s chips. (See Europe gets medieval on Intel’s assets.) Intel is appealing that fine.

But back to Microsoft, which reportedly says it failed to live up to its deal with the EU because of a technical error that involved about 15 million installations of Windows 7  in Europe over about a year, ending in 2012. The company has reportedly apologized for that super-expensive error. The deal called for Microsoft to provide a browser-choice screen, but a third party noticed it stopped doing so in 2011. (One issue that brings up: whether the EU can effectively monitor its antitrust agreements, according to an analyst quoted by the BBC.) Over the past decade of EU investigations of Microsoft, the U.S. company has been fined more than 2 billion euros.

In 1998, the United States brought an antitrust lawsuit against Microsoft over its bundling of Internet Explorer with Windows. A settlement was reached in 2001, and U.S. antitrust oversight of the company ended in 2011. (See Quoted: For Microsoft, the end is near.)

Microsoft shares are down about 1.5 percent to $27.95 as of this post, while Google shares are down about 1 percent to $830.59.



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