Microsoft must pay $1.4bn to EU

[edesignuk]

The European Commission has fined US computer giant Microsoft for defying sanctions imposed on it for anti-competitive behaviour.

Microsoft must now pay 899 million euros ($1.4bn; £680.9m) after it failed to comply with a 2004 ruling that it took part in monopolistic practices.

The ruling said that Microsoft was guilty of not providing vital information to rival software makers.

EU regulators said the firm was the first to break an EU antitrust ruling.BBC (http://news.bbc.co.uk/1/hi/business/7266629.stm).

They might make ~$5bn per quarter (http://www.marketwatch.com/news/story/microsoft-profit-boosted-vista-office/story.aspx?guid=%7B46D585CE-B7D5-4F18-A19F-7EA2202FC200%7D), but seeing $1.4bn walk out the door has got to hurt to some degree. Ouch.

Sucks for them that the € is at record highs (http://news.bbc.co.uk/1/hi/business/7265963.stm) against the $ :p

[sunfast]

tee hee hee

(maybe that's a bit immature of me)

[Queso]

The only annoying thing about this is that the Commission will probably just waste it like they do with so much other cash. When was the last time an audit of their accounts was signed off?

[edesignuk]

The only annoying thing about this is that the Commission will probably just waste it like they do with so much other cash. When was the last time an audit of their accounts was signed off?maybe the MEP's can spunk (http://news.bbc.co.uk/1/hi/world/europe/7256045.stm) it for them :rolleyes:

[Queso]

maybe the MEP's can spunk (http://news.bbc.co.uk/1/hi/world/europe/7256045.stm) it for them :rolleyes:
They don't do themselves any favours do they? :rolleyes:

Mind you, the Westminster bunch are no better.

[UltraNEO*]

M$ can afford it..
Nothing to worry about, actually I think they should of upped it to $2bn just to be on the safe side.. lol :D

[IJ Reilly]

At least the European antitrust law system has some teeth.

[PlaceofDis]

i'm glad they're not being allowed to just hold it up and avoid paying it.

[blitzkrieg79]

Actually this time I am on Microsofts side, their OS is their intellectual property, why should they release one line of code to competition when they spent their own time and money developing it. Mac has Safari and quicktime player built in the OS and no one is complaining about it but thats because Mac OS X is still a small player and doesn't grab the attention like a multibillion company of Microsoft.

Let EU design their own OS and see how much time and money it takes to get it all right and then share it with others for free. If they don't like it they can use Linux. Windows is not the only OS in the world so they are not a monopoly.

All EU does is fine successful companies and then wastes billions of Euro on unnecessary meetings and stupid laws that limit economic growth.

[Much Ado]

Windows is not the only OS in the world so they are not a monopoly.

I think you need to brush up on your definition of 'monopoly' :rolleyes:

[bartelby]

Mac has Safari and quicktime player built in the OS and no one is complaining about it but thats because Mac OS X is still a small player and doesn't grab the attention like a multibillion company of Microsoft.

But Mac OS is based on open source code.

[IJ Reilly]

Windows is not the only OS in the world so they are not a monopoly.

This is not a definition of any importance to antitrust law. If it was, you might as well throw out all antitrust laws entirely because the standard could almost never be met. In any event, in antitrust law, monopoly isn't the illegal act, it's restraint of trade. This concept is often confused with monopoly, but it isn't the same thing, not by any means.

[yeroen]

I suspect the "fine" is largely symbolic. The courts won't ever see a dime.

At least in America, this is often how judgements against corporate entities work.

[IJ Reilly]

I suspect the "fine" is largely symbolic. The courts won't ever see a dime.

At least in America, this is often how judgements against corporate entities work.

This is a regulatory fine, not a court judgement.

[blitzkrieg79]

I think you need to brush up on your definition of 'monopoly' :rolleyes:

Monopoly - In Economics, monopoly (also "Pure monopoly") is a persistent situation where there is only one provider of a product or service in a particular market. Monopolies are characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods. [1] Alternatively (a modern and less common usage), it may be used as a verb or adjective to refer to the process (see Monopolism) by which a firm gains persistently greater market share than what is expected under perfect competition. The latter usage of the term is invoked in the theory of monopolistic competition.

Anyway, as I stated, no one is forcing people to buy MS products, MS is a successful company that really grew large with the release of Windows 95. Till that time you had bunch of OSs around, you had OS/2, you had AmigaOS, you had Atari and CP/M, and you had Mac OS, MS wasn't that dominant back then, basically everyone had an equal chance, what made MS Windows 95 so successful was because it was an open architecture, it wasn;t tied up to proprietary parts like most of it's competition back then. Microsoft earned it, spent their time and money, and developed Win 95. I am not saying that MS is innocent and doesn't abuse it's power but to get punished simply for not releasing it's own code is a bit ridiculous to me. Bigger problem is MS buying out small innovative companies.

And as far as Mac OS X being open source, it's not as open as it used to be, Jobs made sure of that. I really don't see a big deal of an OS being open source or not. If you want to develop your own OS and give it away for free then it's your choice. I know if I was in charge of MS I wouldn't give anything away for free. You want to use/access certain part of a code you need to buy a license from me. As I said earlier, people are not limited to MS Windows/Vista, there are other choices, in this case I see a company being punished for being too big and too successful.

[Much Ado]

Monopoly - In Economics, monopoly (also "Pure monopoly") is a persistent situation where there is only one provider of a product or service in a particular market.

That's a simplistic summary that I presume is from wikipedia. Barriers to entry? Price setter? etc. Remember, this is about anti-trust laws regarding monopolistic practices.

In any event, in antitrust law, monopoly isn't the illegal act, it's restraint of trade. This concept is often confused with monopoly, but it isn't the same thing, not by any means.

Quoted from truth.

[IJ Reilly]

Monopoly - In Economics, monopoly (also "Pure monopoly") is a persistent situation where there is only one provider of a product or service in a particular market. Monopolies are characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods. [1] Alternatively (a modern and less common usage), it may be used as a verb or adjective to refer to the process (see Monopolism) by which a firm gains persistently greater market share than what is expected under perfect competition. The latter usage of the term is invoked in the theory of monopolistic competition.

The point is, this definition is not relevant. A company can have a monopoly and not violate antitrust laws, and they can violate antitrust laws without a monopoly. The relevant concepts are "market power" and "restraint of trade."

You could look it up.

[blitzkrieg79]

The point is, this definition is not relevant. A company can have a monopoly and not violate antitrust laws, and they can violate antitrust laws without a monopoly. The relevant concepts are "market power" and "restraint of trade."

You could look it up.

I am not a big fan of Microsoft by any means, I just think that in this case Microsoft is being punished for having too much market share in OS world. Again, how did MS violate any antitrust laws by not releasing it's OWN code for it's CORE product after spending it's OWN resources to develop it? I know MS is known for buying out small companies but thats not why they are being fined by EU here.

[mahashel]

I thought the EU was pushing their luck when I first read about their case against Microsoft a couple years back. I'm not a fan of MS's business practices (nor their products, really), but this did seem a bit over-the-top.
However, lately it's been fairly obvious that Microsoft's *attitude* has been one of passive-aggressive defiance and obstruction in this case. Granted, having a crappy attitude is not technically illegal, but it certainly doesn't help your case any to metaphorically thumb your nose at the judge when you have your day in court. ;)
ie: They were required, by EU mandate, to provide documentation regarding client compatibility with Microsoft servers. Their response was a late, half-assed attempt at providing the protocol documentation. The court found it incomplete and very poorly written, rendering the information so obtuse as to be useless. It is this behavior (as well as other things.. like them "offering" to license said horrible documentation for a steep percentage) that has caused what little sympathy I had for them in this case to evaporate.

[IJ Reilly]

I am not a big fan of Microsoft by any means, I just think that in this case Microsoft is being punished for having too much market share in OS world. Again, how did MS violate any antitrust laws by not releasing it's OWN code for it's CORE product after spending it's OWN resources to develop it? I know MS is known for buying out small companies but thats not why they are being fined by EU here.

Fan or not, the principles are the same. Microsoft publishes Windows APIs, but has also been known to hide some of them from competitors, in order to give their internal software developers an advantage. That's a classic abuse of market power and a restraint of trade. They are being punished for this behavior, not for having too much market share. Antitrust law is about what a company does with its market power, not about having it.

[gnasher729]

The only annoying thing about this is that the Commission will probably just waste it like they do with so much other cash. When was the last time an audit of their accounts was signed off?

The EU doesn't get any more money (to waste or whatever); they have a budget to spend, and that budget is unchanged. What changes is the amount of taxes that EU tax payers have to pay to cover the spending; that amount will be reduced by 800 million Euros.

[Abstract]

At least the European antitrust law system has some teeth.

Yeah, I'm shocked too.

[blitzkrieg79]

Fan or not, the principles are the same. Microsoft publishes Windows APIs, but has also been known to hide some of them from competitors, in order to give their internal software developers an advantage. That's a classic abuse of market power and a restraint of trade. They are being punished for this behavior, not for having too much market share. Antitrust law is about what a company does with its market power, not about having it.

I don't think they are abusing any market power, again, they developed their own OS with their own time and money so they can do with it whatever they want, it's their intellectual property. If someone doesn't like it, let them design their own OS from scratch to see how many year and how much money it takes to develop the OS. I think that MS was willing to share parts of the code for a set fee which makes perfect sense in my book, I see absolutely zero reason why they should give away anything for free. Again, if MS was abusing their power, Windows wouldn't have the millions of available software titles available for the platform and other OSes would probably flourish because of it.

[theBB]

I am not a big fan of Microsoft by any means, I just think that in this case Microsoft is being punished for having too much market share in OS world. Again, how did MS violate any antitrust laws by not releasing it's OWN code for it's CORE product after spending it's OWN resources to develop it? I know MS is known for buying out small companies but thats not why they are being fined by EU here.
The media is not explaining the reasoning behind the order well, so people get the wrong impression. MS is not ordered to release its source code so that competitors can design better operating systems. It is to prevent MS from taking over other computer related markets unfairly. MS uses some of its hidden codes and hooks to leverage its dominant position in operating systems so that it gains unfair advantage in other software (office suites, browsers, media players.) Its competitors faces more difficulty designing software that runs on Windows in a reliable or efficient manner.

[Rodimus Prime]

you should relieze that apple is next. The iPod iTMS and Fairplay DRM combo is a pretty easy target to go after. It uses it market power to keep others out of both markets. No music store is going to have access to a lot of songs with out DRM on it and they if they do have DRM it hurts not being able to work on the iPod.

iPod has some huge market power to keep from being knocked off by the iTMS tieing people to the iPod.

Apple is next in line.

[twoodcc]

well, i'm kinda glad to see this. at least they are getting caught now

[Abstract]

you should relieze that apple is next. The iPod iTMS and Fairplay DRM combo is a pretty easy target to go after.

I agree. I was going to post the same thing.

Personally, I think Apple really should get the same treatment that Microsoft has received. I like Apple, but there is a big case against them. Being charged would be entirely warranted, if the case against Microsoft is deemed fair.

[IJ Reilly]

I don't think they are abusing any market power, again, they developed their own OS with their own time and money so they can do with it whatever they want, it's their intellectual property.

Sorry, but this is simply not true. It is by no means a trivial task to prove that a company has abused their market power, but Microsoft has been proven in courts of law to have done it, again and again, over a period of decades. They have violated trade laws repeatedly.

I agree. I was going to post the same thing.

Personally, I think Apple really should get the same treatment that Microsoft has received. I like Apple, but there is a big case against them. Being charged would be entirely warranted, if the case against Microsoft is deemed fair.

Why? Please be specific, and cite the applicable trade laws.

[hulugu]

I agree. I was going to post the same thing.

Personally, I think Apple really should get the same treatment that Microsoft has received. I like Apple, but there is a big case against them. Being charged would be entirely warranted, if the case against Microsoft is deemed fair.

Funny thing, I haven't heard to this "big case" against Apple. Can you please describe what Apple has done wrong?

^ Never mind. I just noticed IJ posted nearly the same thing.

[Abstract]

Why? Please be specific, and cite the applicable trade laws.

I just don't see much difference between what Apple is doing with the iPod, iTMS, movies, Fairplay DRM, and locking everyone else out, and what Microsoft has done with something like.....Internet Explorer with Windows XP.

[maxrobertson]

I am not a big fan of Microsoft by any means, I just think that in this case Microsoft is being punished for having too much market share in OS world. Again, how did MS violate any antitrust laws by not releasing it's OWN code for it's CORE product after spending it's OWN resources to develop it? I know MS is known for buying out small companies but thats not why they are being fined by EU here.

Quit arguing and read about antitrust law. Specifically, read up on EU antitrust law and you'll know the answer to your question.

[maxrobertson]

I don't think they are abusing any market power, again, they developed their own OS with their own time and money so they can do with it whatever they want, it's their intellectual property. If someone doesn't like it, let them design their own OS from scratch to see how many year and how much money it takes to develop the OS.

Have you ever heard of BeOS? NeXT? Those are two operating systems developed that were 1.) Years ahead of Windows and Mac OS In almost every way and 2.) Crushed by Microsoft using illegal business practices like the ones they are being punished for by the EU. Your argument is totally moronic, by the way. No company should be given full power or they will abuse it like Microsoft does and put out crappy products, like Microsoft often does, and any company that chooses not to compete on the Windows platform was, up until recently, killing itself.


I just don't see much difference between what Apple is doing with the iPod, iTMS, movies, Fairplay DRM, and locking everyone else out, and what Microsoft has done with something like.....Internet Explorer with Windows XP.


I can't believe people don't see a difference. iTunes is MEDIA Internet Explorer is THE WEB. Is there no difference? The web is the most important thing on a computer at this point, and the fact that IE at one point had pretty much a stranglehold on it made it a big deal. Apple doesn't really have much of a choice with their DRM and obviously would like to get rid of it, except that not all the labels will let them sell DRM-free tracks.

[IJ Reilly]

I just don't see much difference between what Apple is doing with the iPod, iTMS, movies, Fairplay DRM, and locking everyone else out, and what Microsoft has done with something like.....Internet Explorer with Windows XP.

It's all about market power, and how it's used. If a competitor (or the government) could demonstrate that Apple is restraining trade and creating artificial barriers to competition, then maybe an antitrust case could be made against them. Some complaints have been made about the iPod, but I don't think much of them, in terms of antitrust. All of the music players support some proprietary DRM schemes and not others. The iPod plays non-DRM formats. So how is competition being thwarted here? In such a diverse market, that would be very difficult to demonstrate, which is probably why nobody has yet. I can't think of a single potential antitrust issue with the iTMS. Do you know something I don't?

Microsoft has been accused and convicted of multiple antitrust violations. They involve using their overwhelming OS market share to deliberately disadvantage competitors. When you own 90% of a market, you have to be very careful about not using that power to decide who wins and who loses in that market. Maybe we forget that Microsoft drove Netscape out of business simply by having the huge competitive advantage of owning the platform where Netscape had 90% of its market. They've been using their market power in similar ways to destroy competitors for decades. This is what gets them in trouble with regulators. It also doesn't help their case that they routinely try to avoid complying with court and regulatory orders.

[gnasher729]

I am not a big fan of Microsoft by any means, I just think that in this case Microsoft is being punished for having too much market share in OS world. Again, how did MS violate any antitrust laws by not releasing it's OWN code for it's CORE product after spending it's OWN resources to develop it? I know MS is known for buying out small companies but thats not why they are being fined by EU here.

Let me first say that I can't understand how the moderators let you get away with your username. Do you actually know what it means? (I am talking of invading Poland, Belgium, The Netherlands, killing lots of Jews and all that stuff).

And second, you don't seem to have any idea what is going on here. Nobody wants Microsoft's source code. Absolutely nobody. Microsoft even volunteered to publish their source code, and the EU told them to p*** off. What everyone wants is the definition of protocols. A specification that says what messages you can send to a server, and how it is supposed to respond to those messages. Since Microsoft has a hold on the market, there are only two possibilities to keep competition alive: Either force Microsoft to publish their protocols so that anybody can write software to connect to them, or make the use of Microsoft's protocols illegal and require the use of protocols following standards that are available to everybody.

[Rodimus Prime]

It's all about market power, and how it's used. If a competitor (or the government) could demonstrate that Apple is restraining trade and creating artificial barriers to competition, then maybe an antitrust case could be made against them. Some complaints have been made about the iPod, but I don't think much of them, in terms of antitrust. All of the music players support some proprietary DRM schemes and not others. The iPod plays non-DRM formats. So how is competition being thwarted here? In such a diverse market, that would be very difficult to demonstrate, which is probably why nobody has yet. I can't think of a single potential antitrust issue with the iTMS. Do you know something I don't?

Microsoft has been accused and convicted of multiple antitrust violations. They involve using their overwhelming OS market share to deliberately disadvantage competitors. When you own 90% of a market, you have to be very careful about not using that power to decide who wins and who loses in that market. Maybe we forget that Microsoft drove Netscape out of business simply by having the huge competitive advantage of owning the platform where Netscape had 90% of its market. They've been using their market power in similar ways to destroy competitors for decades. This is what gets them in trouble with regulators. It also doesn't help their case that they routinely try to avoid complying with court and regulatory orders.

I think where they will get hit is dealing with the music store more than the player. They are hurting music stores opening up because only DRM that will play on the number 1 MP3 by far is apples. On top o that apples DRM only will play on the iPod and no one else.

The work around of burning and ripping is not an acceptable solution or a defense.

Apple set up hurts other music stores from really breaking in.

[IJ Reilly]

I think where they will get hit is dealing with the music store more than the player. They are hurting music stores opening up because only DRM that will play on the number 1 MP3 by far is apples. On top o that apples DRM only will play on the iPod and no one else.

The work around of burning and ripping is not an acceptable solution or a defense.

Apple set up hurts other music stores from really breaking in.

I don't see it, especially given the number of online music stores offering downloads free of DRM. Amazon just started their music store and already they moving up the sales list quickly. Also, all iTMS content plays on iTunes, which is free, so an iPod isn't even required.

[Rodimus Prime]

I don't see it, especially given the number of online music stores offering downloads free of DRM. Amazon just started their music store and already they moving up the sales list quickly. Also, all iTMS content plays on iTunes, which is free, so an iPod isn't even required.

but does not change the fact that most of that paid for music ends up in some type of mp3 player.

I just stated exactly where they would get hit with an anti trust. They are taking advantage of the iPod market power by keeping other music stores from gaining power and limiting how far they will go.
A lot of music will always be limited by DRM.

[IJ Reilly]

but does not change the fact that most of that paid for music ends up in some type of mp3 player.

I just stated exactly where they would get hit with an anti trust. They are taking advantage of the iPod market power by keeping other music stores from gaining power and limiting how far they will go.
A lot of music will always be limited by DRM.

That's hardly clear. The trend seems to be away from DRM. How quickly it moves is entirely up to the music industry, not Apple. But it is evident that Apple isn't creating any anticompetitive barriers to entry from other online music sellers. You haven't made any argument for antitrust violations that I can understand.

[dsnort]

Let me first say that I can't understand how the moderators let you get away with your username. Do you actually know what it means? (I am talking of invading Poland, Belgium, The Netherlands, killing lots of Jews and all that stuff).

Do you know what it means?

blitzkrieg |ˈblitsˌkrēg|
noun
an intense military campaign intended to bring about a swift victory.
ORIGIN World War II: from German, literally ‘lightning war.’

In it's literal meaning, the German word blitzkrieg has nothing to do with the Holocaust or any other war crimes committed by the Nazi regime. It is however, closely associated with the Nazi's as they were in political control of Germany at the time Blitzkrieg was first used as a battle strategy by the Wermacht.

[Rodimus Prime]

That's hardly clear. The trend seems to be away from DRM. How quickly it moves is entirely up to the music industry, not Apple. But it is evident that Apple isn't creating any anticompetitive barriers to entry from other online music sellers. You haven't made any argument for antitrust violations that I can understand.

I think it is more apple blinders so you can not see the argument.

Number 1 player only plays DRM music from iTMS. The iTMS only works on the number one MP3 player.

Those 2 facts really hurt others from moving into the market.

[IJ Reilly]

I think it is more apple blinders so you can not see the argument.

Number 1 player only plays DRM music from iTMS. The iTMS only works on the number one MP3 player.

Those 2 facts really hurt others from moving into the market.

Ridiculous. You simply have not demonstrated any circumstances which approach, let alone equal, antitrust. You haven't even tried.

I pointed out earlier that making an antitrust case is not a trivial exercise. I pointed out the number of years and the mountains of evidence it required to bring successful charges against Microsoft. I pointed out that it has nothing to do with whether you like the company. It's all about facts and the law. You must have both in your favor, not just vague theories and opinions.

[hulugu]

...Those 2 facts really hurt others from moving into the market.

This simply not true, if a company wants to get into the iPod market, they have to sell DRM-free songs.
Frankly, except for iTunes, the rest of the digital music field is a graveyard of companies that tried and failed to sell DRM-laden music. Even the mighty Walmart failed to convert the brick-n-mortar stores' sales into a good digital business. Rhapsody, Sony, and others have tried and failed while eMusic has been a continuous, if relatively unacknowledged success.

Simply put, the existence of eMusic disproves any anti-trust argument that could be brought against Apple.

Further, if you want to use an iPod, but not iTMS, you're free to do so. If you want to use iTMS, you're going to have to jump through a hoop to avoid using an iPod/iPhone, but you still can. Thus, consumers are free to make choices and therefore there is not even a monopoly much less grounds for an antitrust lawsuit.

[sowillo14]

Let me first say that I can't understand how the moderators let you get away with your username. Do you actually know what it means? (I am talking of invading Poland, Belgium, The Netherlands, killing lots of Jews and all that stuff).


Blitzkrieg is also a song by Metallica. Why don't you call them up and complain? And while you're at it tell Lars they haven't had a good song worth steeling since "Justice for All." ; )

[gnasher729]

I think where they will get hit is dealing with the music store more than the player. They are hurting music stores opening up because only DRM that will play on the number 1 MP3 by far is apples. On top o that apples DRM only will play on the iPod and no one else.

We all know that customers don't want DRM anyway. So anyone who wants to sell downloadable music can just do what Amazon does: Sell music without DRM. In MP3 format. Or preferably in AAC format (which is just as open as MP3, but many manufacturers didn't use it because they were afraid of Microsoft). It's what customers want, and it plays everywhere. Or sell CDs. The huge majority of all music is sold on CDs.

The other way round, you can make music that you buy from Apple with DRM play on any portable music player whatsoever in two simple steps, using the same software that you used to buy the music in the first places. Two well-documented steps. And here we are in the comparison with Microsoft: Microsoft was charged $1.4bn for withholding information how to interact with their servers. Apple provides the information how to use Apple DRM'd music freely, and it has documented how to convert any other music format to make it playable on the iPod. The documentation is freely available from Apple, at no charge. Microsoft was also charged for disobeying a court order from 2004 to 2007, that is actually the bigger part of their fine. There is no court order against Apple at all.