The European Commission has fined Microsoft a record $1.35 billion for noncompliance with its March 2004 antitrust decision. Commissioner Neelie Kroes said the fine is in response to the software giant’s continued stifling of innovation by charging other companies prohibitive royalty rates for the essential information they need to offer software products.
“Charging such an unreasonable price effectively rendered the offer of the information pointless,” Kroes said.
Flouting the Rules
The EC’s 2004 decision had required Microsoft to disclose complete and accurate interoperability information to developers of server operating systems on reasonable terms. Initially, Microsoft had demanded a royalty of 3.87 percent of a licensee’s product revenues for a patent license and 2.98 percent for a license governing access to secret interoperability information.
The EC concluded that Microsoft’s royalty rates were unreasonable before October 22, 2007 — the date when the software giant agreed to accept a 0.4 percent royalty for a worldwide patent license and a one-time payment of $14,240 for access to its interoperability information.
“Microsoft’s behavior did not just harm a few individuals or a handful of big companies,” Kroes said. “Directly and indirectly this had negative effects on millions of offices in companies and governments around the world.”
Kroes also said the record fine contains lessons that Microsoft and any other company contemplating similar illegal actions will need to learn.
“We don’t want talk and promises — we want compliance,” Kroes warned. “If you flout the rules you will be caught, and it will cost you dear.”
Microsoft has a long history of doing the absolute minimum — or in this case, less than the minimum — required by regulators, noted Linux Foundation spokesperson Amanda McPherson. “Hopefully this fine and the changes in the market will convince Microsoft to open up and comply with regulatory and market demand,” McPherson said.
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