Microsoft Lofo

It seems almost yearly that Microsoft are fined for breaking some kind of rule, but the most recent punishment bestowed upon the technology giant is much more than a slap on the wrists.

Missing Browser Ballots

Microsoft were fined €561 million ($731 million) by the European Commission for breaking an agreement set in 2009. Reaching a settlement with the EC, they agreed to include a ‘browser ballot’ on European versions of Windows. When Windows is installed, users are given the option to choose their browser from a list of around a dozen, rather than being automatically given internet explorer.

Following a 2011 service pack update however, the multiple-choice option that appears upon installation was missing, and IE was present as the default browser.

The initial ruling was set due to complaints from smaller competitors that Microsoft were dictating the browser market by automatically bundling one piece of software (Internet Explorer) in with another (Microsoft Windows).

The opinion was that Microsoft was trying to monopolise the browser market by exploiting its dominant position as the most popular operating system available.

 

Beating A Dead Horse

TechCrunch has described the decision to fine Microsoft as ‘beating a dead horse.’ With browsers such as Chrome and Firefox now among the most popular, and the prominence of mobile browsing, the sanction seems a little out-dated. The fine is apparently lenient, equating to around 1% of Microsoft’s annual global annual sales (they could have paid as much as 10%), but one has to wonder if there needed to be a penalty at all.

Microsoft has decided not to appeal the decision, and in a statement explained that the missing browser ballot occurred due to a ‘technical error’, and accepted full responsibility.

A History of Fines

Microsoft have been sanctioned on a number of occasions for similar instances, and the New York Times reported that in just over ten years, Microsoft have incurred $3.4 billion worth of fines. The ‘antitrust law’ prevents saturation of the marketplace, and aims to give businesses equal opportunity to fight for position in the market. On a number of occasions it has been deemed that Microsoft have violated these restrictions and have paid subsequent penalties.

  • 2004 Microsoft’s first run in with the European Commission came in 2004 after it was decided that they were breaching EU competition law. Complaints came after competitors were unhappy that Windows Media Player was being bundled with copies of Windows Operating System, and that they were being refused access to information enabling easy compatibility with their own products. Microsoft were fined €497 million (a record sum at the time) and released versions of Windows without WMP.
  •  2006 Microsoft were ordered to release information as part of the ruling in 2004, however they had only divulged part of what was agreed. In 2006, the court fined them a further €280.5 million for failing to meet the deadline. Appeals fell on deaf ears, and all fines remained.
  • 2008 Not a great year for Microsoft. After they were handed a record penalty in 2004, they broke the record again in 2008, being fined an enormous €899 million ($1.4 billion). This was for failure to comply with the original antitrust decision four years ago. An appeal was launched and the fine was slightly reduced.

These huge sums of money barely affect Microsoft’s yearly profits, and some believe that the fines should have been greater in order to deter them from further violations.

There is a persuasive argument that innovation and creativity are being stifled by big companies’ reluctance to make it easier for smaller businesses to compete or even work alongside them.

Setting a Precedent?

It seems that less prominent developers are becoming increasingly annoyed with larger companies. At SXSW festival in Austin, TX, a Mozilla spokesperson revealed their grievances with Apple. Mozilla stated they won’t be making an iOS version of Firefox as Apple currently restrict the speed of third party browsers on their mobile systems in order to give their own Safari an advantage. What’s more, users are unable to change the default browser from Safari, making it difficult for those that prefer an alternative.

With Apple currently dominating the mobile market, shouldn’t they have a responsibility to be more accommodating to third party browsers? Microsoft’s case must surely set a precedent for incidents like this.

AllThingsD have commented on the out-dated approach of the European Commission in this instance, and mentioned the release of the Chromebook, the Google Chrome-only laptop. It appears to be a single minded approach from those in charge of sanctioning.

A Fair Ruling?

The ruling, whilst having good intentions, seems extremely unfair. Would the EC punish Hewlett Packard printers for containing their own ink? BMW for including its own car seats in their cars? Doc Marten’s for having their own shoelaces? Every market has market leaders, and most products contain their own “sister” products bundled in with them, so isn’t it time the EC started looking further afield?

___________

Sources:

Dear Brussels, you are fighting last century’s battles; AllThingsDEU fines Microsoft Over Browser; NY Times Mircosoft says it will not appeal $731 million fine over browser anti-trust violations; Techcrunch Mozilla says no plans to return to iOS; Cnet EU fines Microsoft record $1.4bn; BBC

Comment