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03.06.13

Microsoft Fine is Fine, But What Else Will be Done? (Updated: FSFE Says EU Fine Not Enough as Punishment for Microsoft’s Abuses)

Posted in Antitrust, Microsoft at 8:36 am by Dr. Roy Schestowitz

Summary: A $730,000,000 fine for Microsoft’s Web browser abuses and refusal to obey the law (or comply with penalties)

AS EXPECTED, a fine for Microsoft to pay for its abuses was to be announced today, as even the state media (in the United States) stated today:

On Wednesday, the European Union is expected to impose a large fine on Microsoft for failing to give users of the company’s Windows software a choice of Internet browsers. It would be the first time that European regulators had punished a company for neglecting to comply with the terms of an antitrust settlement, and it could signal a tougher approach to enforcing deals in other antitrust cases, including one involving Google.

Microsoft and officials at the European Commission reached an antitrust settlement in 2009 that called on the company to give Windows users in Europe a choice of Web browsers instead of pushing them to Microsoft’s Internet Explorer. But Microsoft failed to offer users such a choice for more than a year — apparently without anyone at the company or the commission noticing.

The fine is now known, and it’s less than a billion dollars, far less than Microsoft has gained owing to this illegally-obtained monopoly:

Europe hits Microsoft with $730M fine over browser choice ‘error’

Microsoft was naughty and got caught, and now it has to pay handsomely. Here’s the rundown on what happened, why it mattered, and why it may not happen again in quite the same way.

Be prepared for Microsoft apologists and PR folks to vilify the European authorities over it. As a little bit of background, consider reading:

  1. Huge Fines for Microsoft Browser Offences
  2. Cablegate: European Commission Worried About Microsoft’s Browser Ballot Screen Being Inappropriate
  3. Microsoft’s Browser Ballot is Broken Again and Internet Explorer 8 is Critically Flawed
  4. Microsoft’s Ballot Screen is a Farce, Decoy
  5. A Ballot Screen is Not Justice, Internet Explorer Still Compromises Users’ PCs
  6. Microsoft Not Only Broke the Law in Europe, So Browser Ballot Should Become International
  7. Browser Ballot Critique
  8. Microsoft’s Fake “Choice” Campaign is Back
  9. Microsoft Claimed to be Cheating in Web Browsers Ballot
  10. Microsoft Loses Impact in the Web Despite Unfair Ballot Placements
  11. Given Choice, Customers Reject Microsoft
  12. Microsoft is Still Cheating in Browser Ballot — Claim
  13. Microsoft Does Not Obey the Law

As justice is too slow, the fine is too little and it’s too late. Just watch this decades-old antitrust case still going on, as Groklaw noted the other day:

A date for oral argument in the WordPerfect antitrust battle, Novell v Microsoft, has been set. It’s May 6, at 9 AM in Courtroom II at the Byron White US Courthouse in Denver, Colorado.

Yes, long after WordPerfect had been made virtually dead judges failed to rule indefinitely and no justice was ever restored. Microsoft has made many billions using the office suite monopoly it illegally obtained. And Novell has been robbed naked by Microsoft since then, rendering one side in this legal battle a lot less potent.

The moral of the story is, if you are a big corporation like Microsoft or Goldman Sachs, the cost of committing crimes is just a minor cost of doing business and it pays off in the long run. Crime is like an investment and nobody ever goes to jail if you are “too big (or groomed) to fail”. The following caricature (no attribution known) expresses this well.

Monopoly

Update: Linking to reports like this one about the fine, the FSFE’s president says:

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.

[...]

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.

A punishment “such as excluding offenders from public procurement for a limited amount of time” may be an interesting option, but still, it is too soft on people who knowingly abuse the law. Why not suggest jail terms? Is it too radical a suggestion to put white-collar criminals in prison in the age of rampant financial abuses and illicit wars? Have we lost a sense of moral by putting only poor people in jail (class incarceration)?

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