Welcome!

Cloud Expo Authors: Liz McMillan, Jeremy Geelan, Gilad Parann-Nissany, RealWire News Distribution, Roger Strukhoff

Related Topics: .NET

.NET: Article

EC Slaps Microsoft with Largest Single Fine It Has Ever Levied

Massive $1.33 billion fine for not complying with its 2004 antitrust order

The European Commission this morning slapped Microsoft with a massive $1.33 billion fine (899 million euros) for charging too much for the communications protocols it was ordered to share with competitors in March of 2004. It is the largest single fine ever levied by the EC and the second time that it has dunned Microsoft for not complying with its original antitrust order.

The first time was in July of 2006 when Microsoft had to fork over $357 million for not providing useable documentation for the protocols.
 
The original fine that Microsoft paid in 2004, itself record setting, was for $613 million, a mere half of today’s penalty.
 
So far then Microsoft’s European adventure has cost it $2.3 billion but it’s likely to have to open its checkbook again after the EC finishes the two new investigations into the company’s business practices that it opened last month.
 
One of those probes is into claims that its browser is tied to its operating system and the other into the interoperability of Office, the .NET Framework and the Office Open XML (OOXML) file format.
 
In making the announcement this morning EC antitrust chief Neelie Kroes called Microsoft “the first company in the 50 years of EU competition policy that the Commission has have to fine for failure to comply with an antitrust decision.”
 
She also said the fine could have been higher. It could have been $2.23 billion (1.5 billion euros).
 
To be fair, the original order told Microsoft it could charge a “reasonable” royalty for its IP. The order did not define what “reasonable” was so “reasonable” is a matter of opinion.
 
Kroes said this morning that the Commission based its conclusion that Microsoft’s royalty demands were  “unreasonable” “on the lack of innovation in a very large proportion of the unpatented interoperability information and a comparison with the pricing of similar interoperability technology.”
 
That, of course, was the opinion of Microsoft’s competitions like the open source Samba Project that complained to the EC about the royalties.
 
Microsoft could of course appeal the fine and it did say this morning that it would review the EC’s decision.
 
But more pressing is containing the fallout of the two ongoing investigations and getting regulatory approval if and when it acquires Yahoo.
 
So it also said, “These fines are about past issues that have been resolved” and that it is “focusing on steps that will improve things in the future.”
 
It pointed to its promise last week to open the APIs and communications protocols in its biggest money-makers – namely Vista, Windows Server 2008, SQL Server 2008, Office 2007, Exchange Server 2007, Office SharePoint Server 2007 and the .NET Framework.
 
Microsoft is being fined something like 1.84 million euros a day for the 488 days before last October 22 that it was out of compliance. As far as the EC is concerned the clock started ticking in July of 2006 when it hit Microsoft with its first non-compliance fine.
 
The EC recounted this morning that Microsoft originally demanded a royalty rate of 3.87% of a licensee’s product revenues for a patent license and 2.98% for a license to the “secret interoperability information.”
 
The Commission sent Microsoft a Statement of Objections on March 1, 2007 regarding the pricing and Microsoft dropped the royalty rates to 0.7% for a patent license and 0.5% for an information license on May 21, 2007.
 
On October 22, 2007, when the EC figures Microsoft finally became compliant, the company dropped the price again to a flat fee of 10,000 euros and an optional worldwide patent license for 0.4% of a licensee’s product revenues.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


Cloud Expo Breaking News
As more enterprises are adopting clouds, the nature of cloud computing is changing. Previously, clouds were used to test applications or for non-mission critical applications. Today, enterprises are using clouds for cost-saving advantages and launching more mission critical applications that have defined performance needs. In his session at the 10th International Cloud Expo, Eric Shepcaro, CEO and Chairman of the Board of Telx, will discuss how distributed computing has many advantages. It wou...
Building a cloud computing environment with on-demand access to compute, network, and storage resources requires an elastic infrastructure at multiple levels. Virtualization combined with x86 servers has transformed the way we scale out compute resources. Unfortunately, legacy Fibre Channel and iSCSI storage architectures are rooted in rigid mainframe-era designs, and are fundamentally mismatched with the dynamic, shared modern data center. In his session at the 10th International Cloud Expo, ...
With Cloud Expo 2012 New York (10th Cloud Expo) just four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where do they work, what else h...
With Cloud Expo 2012 New York (10th Cloud Expo) now under four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where do they work, what e...
With Cloud Expo 2012 New York (10th Cloud Expo) now under four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where do they work, what e...
2011 was a year of rapid adoption for public and private cloud services. Instant and on-demand server provisioning was the driving force behind the massive growth. On top, cloud server templates and script automation simplified application installation for simple and pre-defined application stacks, but have not targeted more complex enterprise application environments. In his session at the 10th International Cloud Expo, John Yung, CEO of Appcara, will discuss how 2012 will be the year for app...
With Big Data Expo 2012 New York (co-located with 10th Cloud Expo) now under four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where ...
With Big Data Expo 2012 New York (co-located with 10th Cloud Expo) just four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference...
Can you bring services from the cloud to your customers faster and have them adopt it with ease of use or bring the power of bundled services to the fingertips of your clients without creating new rigid ‘apps stove pipes'? Do you want to prevent your business running away to public and unmanageably immature cloud services? In his session at the 10th International Cloud Expo, Hans van de Koppel, Sr. Enterprise Architect at Capgemini, will take Cloud Expo delegates to the developing world of clou...
Many organizations have embraced, or are considering, the benefits of cloud computing – speed, flexibility, increased expertise, shared workload, reduced costs, etc. The benefits are many – but so are the risks. What are the threats to cloud security? Which parties assume responsibility for securing the environment? What about the data? Which type of cloud deployment offers superior security benefits? In her session at the 10th International Cloud Expo, Kristin Lovejoy, Vice President of Infor...