It said the US software company had broken a legally binding commitment made in 2009 to ensure that consumers had a choice of how they access the internet, rather than defaulting to Microsoft’s Explorer browser.
An investigation found that Microsoft had failed to honour that obligation in software issued between May 2011 and July 2012, meaning 15 million users were not given a choice.
It is the first time the European Commission, the EU’s anti-trust authority, has handed down a fine to a company for failing to meet its obligations.
While the sanction is sizeable, representing 1% of Microsoft’s 2012 fiscal-year revenues, the Commission could have charged the company up to 10% of its global revenue.
“If companies agree to offer commitments which then become legally binding, they must do what they have committed to do or face the consequences,” Joaquin Almunia, the EU’s competition commissioner, told a news conference.
“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.”
Microsoft said it took full responsibility for the incident, which it has blamed on a technical error. The board cut chief executive Steve Ballmer’s bonus last year partly as a result.
The company did not say whether it would challenge the ruling, but it is not expected to do so, largely so as not to antagonise regulators.
“We have apologised for it,” Microsoft said in a statement.
“We provided the Commission with a complete and candid assessment of the situation, and we have taken steps to strengthen our software development and other processes to help avoid this mistake — or anything similar — in the future.”
Almunia said regulators may have made a mistake by allowing Microsoft to police its own behaviour instead of appointing an external trustee to ensure compliance with the commitments.
Microsoft’s fine is a good example of the Commission’s hard line approach towards companies which disregard rules whether deliberately or not, said Charles Whiddington, a partner at London-based law firm Field Fisher Waterhouse.
Wednesday’s fine brings the total of EU fines issued against Microsoft over the past decade to more than €2.2bn, making it the world’s worst offender of EU rules.
While the charge could have been higher, it still marks a firm sanction and will be carefully noted by the likes of Google, which is involved in a dispute with the Commission over how it ranks search engine results.
Google is under pressure to offer concessions to prevent the Commission moving to the next stage in the case, which could involve fines. Other major technology firms such as Samsung Electronics are also under investigation.