EC hits Microsoft with EUR 561 million fine over web browsers

Microsoft just can’t avoid getting into trouble with competition watchdogs.

Today, the European Commission slapped the company with a fine of EUR 561 million (ca. USD 731 million) for breaching a 2009 settlement over the bundling of Internet Explorer with Windows. Under this agreement, Microsoft promised to display a “browser choice” screen on Windows installs in Europe, inviting users to choose other browsers besides the company’s own program.

At FSFE we were cautiously optimistic at the time. We were glad that the European Commission had taken on this issue at all, but we also pointed out that regulators would have to keep a close watch to make sure the browser choice screen was having the intended effect:

It is now up to the users to take advantage of the choice they are offered. Gerloff reminds the EC that it will constantly need to monitor the success of the ‘ballot screen’. “Microsoft is a convicted monopolist and has broken countless promises in the past,” he says. “We urge the European Commission to keep a sharp eye on how well this measure plays out in practice.”

After initially displaying the choice screen in new installs, Microsoft stopped doing so after a while. It claimed that this was due to a technical glitch which had simply gone unnoticed. For more than a year.

Sure. Why would anyone at a company of Microsoft’s size feel the need to keep an eye on such minor details as antitrust settlements?

Joaquín Almunia, the EC’s competition chief, was clearly not amused. In a statement on the fine, he said:

The lack of compliance is, as a matter of principle, a serious breach of EU law itself.

If companies agree to offer commitments which then become legally binding, they must do what they have committed to do or face the consequences – namely, the imposition of sanctions.

I hope this decision will make companies think twice before they even think of intentionally breaching their obligations or even of neglecting their duty to ensure strict compliance.

Faced with a blatant breach of the agreed settlement, the Commission had no choice but to act decisively. The alternative of doing nothing, or imposing a minimal token fine, would have made European competition regulators look like paper tigers.

As Microsoft has now, again, learned to its cost, the EC demands to be taken seriously on such things.

Yet while large in absolute terms, the fine amounts to 1% of the company’s revenue in 2012. There is a danger that companies of this size see regulatory interference as a mere cost of doing business, rather than as an impulse to mend their ways. To achieve this, more forceful measures may be necessary, such as excluding offenders from public procurement for a limited amount of time.