Update: Microsoft fined $357 million in EU antitrust case

The European Commission has fined Microsoft Corp. €280.5 million (US$357 million) for failing to comply with the terms of a March 2004 antitrust judgement against it, the Commission said on Wednesday.

Microsoft has already paid a €497 million fine as a result of the judgement, in which the Commission found that Microsoft had used its near-monopoly in the PC operating systems market to gain advantage in the markets for work group server operating systems and media players.

At the time, the Commission also ordered the company to release a version of Windows XP without a built-in media player, and to provide its competitors with technical details of communication protocols used by its server products.

The €280.5 million fine announced Wednesday is to punish the company for failing to provide those technical details in a timely manner. If Microsoft continues to fail to comply, the Commission will increase the amount of the daily fine to €3 million per day, it said.

"Microsoft says it's committing huge resources to tackling this problem. It's a shame they didn't do so two years ago," said Neelie Kroes, the European Union's competition commissioner.

Microsoft immediately dismissed the decision as inappropriate given what it called its "good-faith efforts" to comply with the judgement. General Counsel Brad Smith called the level of the fine unjustified and said Microsoft would appeal to the European courts to determine whether its compliance efforts have been sufficient and if the fine is justified.

"The fine announced today is larger than the fines the Commission has imposed for even the most severe competition law infringements, such as price-fixing cartels," Smith said in a statement. "When you consider Microsoft’s massive efforts to comply with this ruling, and the fact that more than a dozen companies are already using similar documentation provided in the U.S. to ship actual products, we do not believe this fine is justified."

He reiterated Microsoft's position that the Commission's original decision lacked clarity.

The Commission clearly had not accepted that argument, however.

"I don't buy Microsoft's line that they didn't know what the Commission wanted. It was clear. Microsoft's documentation fell significantly short of the requirements," Kroes said.

Asked how the decision affects Windows Vista, Kroes said the forthcoming OS must "avoid the problems highlighted in the 2004 decision."

"Hopefully when Vista launches next year, all the issues of the 2004 ruling will have been taken into account," she said.

The Commission initially gave Microsoft 120 days to disclose details of the software interfaces used by its server products to communicate with the desktop versions of Windows, so that competing vendors could build compatible systems. Progress was slow, and in March last year, and then again in June, the Commission threatened the company with additional fines if it didn't fully comply with the ruling.

Microsoft succeeded in pushing back the deadline numerous times as negotiations continued, but the Commission remained unsatisfied with Microsoft's progress, notably in documenting its software interfaces.