As yet, there has been no official ruling against Microsoft. But
the International Herald Tribune last week claimed that a draft
ruling recommends that Microsoft should be fined. This week, German
newspaper Die Welt claims that the fine will be €100 million.
The European Commission has the power to fine the company up to
10% of its global turnover for abusing its dominant position. Its
revenues totalled $32 billion in the last fiscal year. So a fine of
€100 million – or US$125 million – would represent less than 0.4%
of that figure.
In its last quarter, Microsoft reported record revenues of $10
billion, or more than $100 million per day. In addition, the
company has enormous cash reserves - last year it reported reserves
of $49 billion.
A finding against Microsoft would come as no surprise, nor would
the imposition of a fine.
The Commission has been investigating Microsoft since 1998, when
competitors accused the company of failing to disclose hardware
specifications necessary to integrate non-Microsoft software into
corporate networks.
The long-running investigation began drawing to a close in
August last year, when the Commission issued a preliminary finding
that Microsoft's practices in Europe were anti-competitive. At that
time, Tilman Lueder, a spokesman for the Commission said: "We are
minded to impose a fine for the past and minded to impose remedies
for the future, and we will adopt a final decision which does
exactly that."
The Commission then gave the company a final chance to make its
case.
Microsoft filed these arguments in November. The bulk of its
defence focused on allegations that it is leveraging its dominant
position from the PC into low-end servers and that Microsoft's
tying of Windows Media Player to the Windows PC operating system is
anti-competitive.
The Commission has already indicated that it is prepared to
order that Microsoft reveal source code to allow rivals such as Sun
Microsystems to achieve full interoperability with Windows PCs and
servers, and thus – at least in theory– compete on a level playing
field.
With respect to tying, the Commission has set out two
alternative proposed remedies. The first would be the untying of
Windows Media Player from Windows, whereby Microsoft would be
required to offer a version of Windows without Windows Media Player
included. This is a normal remedy for a tying infringement.
The second would be a "must-carry" provision, whereby Microsoft
would be obliged to offer competing media players with Windows.
Both solutions seek to ensure that consumers have a fair choice of
media players.
An official ruling is not expected until the Spring. In response
to last week's rumours of a decision going against Microsoft,
European Competition Commissioner Mario Monti confirmed that a
draft decision has been reached, but he refused to reveal its
details.
According to Reuters, Monti told reporters that a settlement was
still possible: "We are not against a settlement if that is clearly
in the consumer interest, but time is running out".
