News

Microsoft Told To Pay $1.1 Billion by European Court

• By Kurt Mackie
• 06/27/2012

Microsoft on Wednesday lost an appeal over an €899 ($1.3 billion) penalty that had been imposed by the European Commission (EC) because of the company's past anticompetitive practices.

However, the General Court of the European Union did reduce the penalty to €860 million ($1.1 billion). Nonetheless, Microsoft expressed disappointment over the court's ruling, which resolves the final details of a case that began with a complaint by Sun Microsystems in 1998.

The penalty was derived from a decision by the EC in 2004 that Microsoft had impeded the ability of Sun Microsystems' server to interoperate with Windows because Microsoft had not released interoperability information. That case was just the beginning of a series of anticompetition rulings against Microsoft by the EC that also included Microsoft's use of its Windows monopoly to dominate the media player and browser markets in Europe.

The EC had imposed the record €899 fine on Microsoft in 2008 for noncompliance with the 2004 ruling, but the company also was slapped with a 2004 fine and a 2006 penalty (see the Associated Press' timeline). One of the problems that the EC had with Microsoft is that it was considered to be charging too much for the interoperability documentation when it did provide it.

The 2008 fine was reduced by the General Court due to a delay in implementing the EC's decision. According to an EC press release issued on Wednesday, "the Commission had allowed Microsoft to await the General Court's judgment on the Commission's 2004 Decision before allowing the actual distribution of interoperable products by open source developers," which is why the penalty was reduced.

Joaquín Almunia, vice president of the EC, issued a statement that the General Court's judgment was a vindication of the EC's enforcement actions.

"The requirement that Microsoft disclose information to its competitors so as to allow interoperability between the dominant Windows architecture and rival work group servers brought significant benefits to users," Almunia wrote. "A range of innovative products that would otherwise not have seen the light of day were introduced on the market."

Ironically, Almunia has been an advocate for an EC investigation into whether Google's Motorola Mobility acquisition is asking too much to license technologies covered under "fair, reasonable and nondiscriminatory" (FRAND) terms. The EC's investigation in that matter is largely being pushed by complaints from Apple and Microsoft.

Google wants 2.25 percent of Microsoft Xbox sales for the use of Motorola Mobility's video codec technology. Google's royalty claim on H.264 FRAND technology may reflect a broader legal struggle. For instance, Microsoft has exacted intellectual property settlements from multiple hardware vendors that make mobile devices using the Google-fostered Android operating system.

Microsoft's claim that the Linux-based Android OS is infringing its non-FRAND-associated intellectual property has the effect of making Android use more costly for device makers. That negative circumstance may be a motivating factor for Google's FRAND royalty claims, which are now under investigation at the EC.