EU Hounds Microsoft - Threatens $2M Euros Daily Fine

Bloomberg reports on an ongoing battle between Microsoft and the European Union regulators who have fined an additional 280.5 million euros (US$357)citing antitrust violations. Claims state the world's largest software maker has disregarded an order to weaken its Windows monopoly.

Microsoft has been ordered by the European Commission to essentially tell its rivals Windows trade secrets. Rivals are to be licensed details on how Windows communicates across a network.

This penalty comes after the original 2004 497 million euro fine.

Microsoft is appealing.

Microsoft, whose software runs on about 95 percent of the world's personal computers, faces additional penalties of as much as 3 million euros a day if it continues to resist the antitrust decision, Neelie Kroes, a European Competition Commissioner, said.

An appeal was made in April of this year stating the EU's case "is flawed and the order violates its right to protect trade secrets."

Ronald Cass, president of Cass & Associates, a legal consulting firm, stated in an e-mail:

Rather than await the court's ruling, the commission has decided to use brute bureaucratic force to implement its decision and to punish what it sees as recalcitrance by Microsoft.

If the EU is not waiting for a court decision prior to placing daily fines on Microsoft what is its motive? Courts take years to make decisions, nothing new in the business world, so what makes the EU strong arm Microsoft with the first ever antitrust fine?

Today's fine comes in at a lower than expected price, 1.5 million euros daily. Less than the threatened 2 million euros daily from December. The EU's interest in Microsoft reflects in a stock value loss of 5.4% since March 24, 2004.

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The suit seems hasty and yet outdated.

The 2004 ruling, detailed in a 302-page report, came 2 1/2 years after Microsoft reached a settlement with the U.S. Justice Department. That decision forced the company to allow PC makers to install rival software programs and also ordered Microsoft to release technical information.

Microsoft to date has taken steps to comply with each ruling prior to being fined. In a statement Brad Smith, Microsoft's top lawyer, claimed:

Every time we've been asked to do something we've done it. We didn't need a fine to get us to agree to do something.

Moreover, the original fine has been paid. The company began shipping a version of Windows, sans media player, after president of the Court of First Instance Bo Vesterdorf denied Microsoft's delay request in 2004 on order of pending the appeal.

The information provided by Microsoft contains some 12,000 pages of technical documentation. Additionally, Microsoft offers "unlimited free support and plans to license the course code, or programming instructions, for Windows."

I must agree with Mike Sax's, Chairman of the Association for Competitive Technology, opinion when he said:

If the teams at Red Hat and IBM aren't able to create interoperable software with all these resources, they simply aren't trying.

Why should Microsoft be forced to reveal trade secrets when plenty of other companies have the resources to create something similar. While I fully believe regulations should be in place to avoid a monopoly the competition should try harder and not ask for handouts.

Microsoft wasn't built in a day. What took competitors so long to notice and why are they now dragging their feet asking for hand outs?

"The real issue here is not about compliance, it is about clarity," Smith said. Microsoft has 300 employees ``working around the clock'' and plans to deliver the final piece of information to the EU by July 24, he said.