Microsoft fined €497m for abusing market position

GLOBAL computer software giant, Microsoft, has been found guilty of abusing its dominant market position by freezing out competitors and must pay a record fine of €497 million as a result, the European Court in Luxembourg has found.

The decision should lead to a bigger, cheaper, more innovative choice of programmes on computers in future, said a delighted EU Competition Commissioner Neelie Kroes, for whom the decision was a huge victory.

Ms Kroes said consumers have lost out as a result of Microsoft’s practices before promising that the commission will do its utmost to ensure the company complies swiftly with the decision.

Microsoft, the world’s biggest software maker with revenues last year of over $51 billion, said it had not decided yet whether to appeal. It has two months to decide and the final decision could take a further two years.

The US company’s lawyer Brad Smith said in Brussels yesterday the company was “100% committed to complying with every aspect of the commission’s decision” but emphasised there were still questions relating to trade secrets to be resolved.

As a result of the Court’s decision Microsoft must give vital codes to other software developers to allow their programmes to run on computers using the Windows operating system (OS).

The operating system is the core software that controls a computer and Windows OS is estimated to be on 95% of the world’s computers.

The company must also immediately stop automatically bundling their Media Player —– to play music and films —– into Windows OS. This practice wiped out the pioneer in this market, Real Player, and has discouraged others from going into this area.

Mr Smith warned, however, that the decision could also herald problems for Apple which has 70% of the digital music market, Adobe Flash that dominates media streaming and BIM with 100% of the mainframe market.

Thomas Vinje, whose organisation, ECIS, represents big and small companies in the industry — including BIM and Adobe — disagreed.

He suggested the ruling related to the abusive behaviour of a player with a dominant position and was not related to market share.

“This is a great day for European businesses and consumers. This decision means that no company, especially one with a super-dominant position, is above the law,” he said.

Industry expert Andrew Donoghue of ZDNet said the court decision will make it more difficult for Microsoft to use its new programmes, Vista and Longhorn, to gain market share.

Microsoft have paid over 1bn in fines since the first complaints were made to the commission nine years ago but in the same period their market share of servers has grown from 40% to 80%.

The latest fines will be distributed to the EU member states in the absence of an appeal.