EU Fines Microsoft Record $1.35 Billion

BRUSSELS (Reuters)- Microsoft was fined a record 899 million euros ($1.35 billion) by theEuropean Commission on Wednesday for using high prices to discouragesoftware competition in the latest sanction in their long-runningbattle.

The executive arm of the European Union said the U.S. software groupdefied a 2004 order from Brussels to provide the information onreasonable terms.

Microsoft has now been fined a total of 1.68 billion euros by the EUfor abusing its 95 percent dominance of PC operating systems throughWindows.

Its latest fine far exceeded the original and was the biggest ever imposed on a company.

"Microsoft was the first company in 50 years of EU competitionpolicy that the Commission has had to fine for failure to comply withan antitrust decision," Competition Commissioner Neelie Kroes said in astatement.

For years after the decision Microsoft said it was making every effort to comply with the Commission’s orders.

"Talk is cheap, flouting the rules is expensive," Kroes said. "We don’t want talk and promises. We want compliance."

Microsoft said in a statement the fines concerned "past issues" and it was now looking to the future.

The Commission said in a landmark 2004 ruling, upheld by an EU courtlast year, that Microsoft had withheld needed interoperabilityinformation for "work group server" software.

RIVALS SHRIVELLED

Rival makers of work group servers, which operate printers andsign-ons for small office groups, saw their markets shrivel becauseMicrosoft stopped providing information they needed to hook up toWindows office machines.

Even after the 2004 decision and a 497-million euro fine Microsoftdragged its feet, giving incomplete documentation and charging highroyalties, the Commission said.

"I hope that today’s decision closes a dark chapter in Microsoft’srecord of non-compliance with the Commission’s March 2004 decision,"Kroes said.

The latest decision picks up from where a 280.5 million euro finefor non-compliance left off, covering the period from June 21, 2006until October 21, 2007. After losing a major court decision inSeptember 2007, Microsoft capitulated.

Last week it promised to publish critical information so rival programs worked better with Windows.

That came as the company was facing this week’s fine and perhapseven more important, two new formal Commission investigations opened inJanuary.

"As we demonstrated last week with our new interoperabilityprinciples and specific actions to increase the openness of ourproducts, we are focusing on steps that will improve things for thefuture," Microsoft said on Wednesday.

The new Commission investigations relate to the issues of the 2004 case but with different products.

The Commission said in 2004 that Microsoft tied its Windows MediaPlayer to Windows. Opera, maker of a Web browser, said Microsoft hasdone the same with Internet Explorer.

The new interoperability question concerns Microsoft Office and thedifficulty for documents from rival systems to interoperate with Wordand other Office products.

Kroes took a wait-and-see attitude about Microsoft’s announcement oflast week, noting it had promised change on four other occasionswithout results.

"A press release, such as that issued by Microsoft last week oninteroperability principles, does not necessarily equal a change in abusiness practice," she said.

(Reporting by David Lawsky; Editing by Dale Hudson and Jason Neely)