EU slaps record €858m fine on Microsoft

Microsoft has been fined a record €858m today by the the European Union for charging rivals too much for software information.

EU regulators said the company had charged “unreasonable prices” to software developers who wanted to make products compatible with the Windows desktop operating system.

The fine is the largest ever imposed on a single company and brings to just under €1.12bn the amount that the EU has ordered Microsoft to fork out in a long-running antitrust battle.

Microsoft immediately said the fines were about past issues that had been resolved and that the company was now working under new principles to make its products more open.

But EU Competition Commissioner Neelie Kroes warned that the company was being investigated on two other separate issues.

She said she was sceptical over license changes the company had announced last week, adding: “Talk is cheap. Flouting the rules is expensive.”

Ms Kroes said Microsoft’s actions had stifled innovation, hurting millions of people who used computers in offices around the world, and called the fine “a reasonable response to a series of quite unreasonable actions”.

“We could have gone as high as €1.45bn,” she said. “The maximum amount is higher than what we did at the end of the day.”

Microsoft fought hard against a March 2004 decision in which it was fined €403m and ordered to share interoperability information with rivals within 120 days, taking an appeal to an EU court that it lost last September.

It was fined again in July 2006 – €231m – for failing to obey that order.

The EU alleged that Microsoft withheld crucial interoperability information for desktop PC software – where it is the world’s leading supplier – to squeeze into a new market and damage rivals that made programs for workgroup servers that helped office computers connect to each other and to printers and faxes.

The company delayed complying with the EU order for three years, the EU said, only making changes on October 22 last year to the patent licenses it charges companies that need data to help them make software that works with Microsoft.

Microsoft initially set a royalty rate of 3.87% of a licensee’s product revenues for patents and demanded that companies looking for communication information – which it said was highly secret – paid 2.98% of their products’ revenues.

The EU complained last March that these rates were unfair. Under threat of fines, Microsoft reduced the patent rate to 0.7% two months later and the information license to 0.5% – but only in Europe, leaving the worldwide rates unchanged.

The EU’s Court of First Instance ruling that upheld regulators’ views saw the company offer a new license for interoperability information for a flat fee of €9,900 and an optional worldwide patent licence for a reduced royalty of 0.4% in October last year.