EU fines Microsoft another 899 million euros for antitrust abuse

The latest punishment brings the total of Microsoft fines to just under 1.7 billion euros

The European Commission fined Microsoft a massive 899 million euros (US$1.3 billion) for continued failure to honor the 2004 antitrust ruling against it, Commissioner for Competition Neelie Kroes said Wednesday.

Europe's top competition authority has already fined the company 777.5 million euros --497 million euros in the original ruling plus a further 280.5 million euros for noncompliance.

The latest punishment brings the total of fines to just under 1.7 billion euros "for a clear disregard of its legal obligations," Kroes said in a news conference.

"The Commission's latest fine is a reasonable response to unreasonable actions by Microsoft," Kroes said.

Microsoft finally came into compliance with the 2004 ruling last October. Kroes said the latest fine -- the biggest yet -- is for noncompliance up to October 22, 2007.

The software giant has over the past four years repeatedly tried to avoid complying with part of the Commission's ruling that ordered the company to detail communications protocols used by its Windows server operating system so that other manufacturers could build systems that interoperate smoothly with Windows.

The latest fine punishes Microsoft for failing to licence those protocols to open source software developers at what the Commission views as a reasonable price.

Microsoft said it is reviewing the Commission's action. "The Commission announced in October 2007 that Microsoft was in full compliance with the 2004 decision, so these fines are about the past issues that have been resolved," it said in a statement. "We are focusing on steps that will improve things for the future."

Anticipating new fines, the company announced last week that it will make its biggest effort yet to help other companies make their products interoperate with its most popular software, including Windows and the Office suite which includes Word, Powerpoint and the Outlook e-mail program.

The Commission reacted with scepticism, pointing out that it had heard similar promises before, and added that the move only addresses one of two new antitrust probes into Microsoft's business practices, which were opened last month.

Both new cases build on the same legal arguments that underpinned the 2004 ruling: one looks into the company's failure to share essential interoperability information in Office. The other is looking into whether the tying of Internet Explorer to Windows amounts to an abuse of antitrust law.

The second case is based on the part of the 2004 ruling that dealt with the tying -- or bundling -- of Media Player to Windows. Microsoft was ordered to sell a second version of Windows with Media Player stripped out. The company complied, but the remedy was deemed useless because the second version was sold at the same price as the version bundled with a media player, and no one bought it.

The size of the fine failed to impress some of those who had helped make the case against Microsoft.

"That's not a fine, that's just a way of getting their attention," said Jeremy Allison, co-creator of the open-source workgroup file and print server software Samba.

The communications protocols that the 2004 ruling forced Microsoft to disclose will benefit projects like Samba. The developers of the current version of Samba, which interoperates with servers and desktop PCs running Windows, were forced to reverse-engineer the format of the messages Microsoft uses because documentation was not publicly available.

Legal counsel to the Free Software Foundation Europe (FSFE) Carlos Piano also said it's not about the fine.

"The most important achievement in this case is not the fine, it's not the disclosure, it's the change in the law," he said, referring to the way in which Microsoft was forced to disclose the protocols on license terms friendly to open source software projects.

(With additional reporting by Peter Sayer in Geneva.)

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