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2/27/2008
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EU Hits Microsoft With Record $1.35 Billion Antitrust Fine

The European Commission imposed the fine after determining that Microsoft isn't living up to the terms of a 2004 antitrust settlement.

The European Union's competition watchdog slapped Microsoft with a record $1.35 billion antitrust fine Wednesday, just days after the software maker had pledged to make it easier for rivals to build products that are compatible with the Windows operating system and other Microsoft technologies.

The European Commission said it imposed the fine after determining that Microsoft isn't living up to the terms of an antitrust settlement that followed a 2004 ruling in which the EC found that the company was engaging in anti-competitive behavior.

Specifically, the EC ruled that Microsoft was overcharging rivals for the documentation they need to make their server products interoperable with Windows-based PCs and servers. The decision was upheld last year by Europe's second highest court.

Following the ruling, the EC ordered Microsoft to make its technical documentation available to rivals under "reasonable" terms and conditions and to work to make its technologies more interoperable with third-party products.

EC officials on Wednesday said Microsoft failed to follow that order.

"Microsoft was the first company in 50 years of EU competition policy that the commission has had to fine for failure to comply with an antitrust decision," EC competition commissioner Neelie Kroes, long a thorn in Microsoft's side, said in a statement.

The EC said Microsoft continued to overcharge for documentation and related patent licenses until Oct. 22, 2007, when the company adopted a flat-fee licensing program and reduced royalty fees. "Microsoft therefore failed to comply with the March 2004 decision for three years," said the EC.

The $1.35 billion fine is in addition to the more than $1 billion in penalties that the EC originally imposed on Microsoft following the 2004 ruling.

Additionally, the EC last month launched two new antitrust probes into Microsoft's interoperability practices and its bundling of the Internet Explorer Web browser with Windows. The probes were sparked by complaints from rivals, including IBM, Oracle, and Red Hat, that have banded together into a group called the European Committee For Interoperable Systems.

Microsoft last week announced significant changes to the way it will manufacture and license software, partly in an effort to appease the EC and other antitrust regulators. Among other things, Microsoft promised to publish more than 30,000 pages of documentation for Windows and client server protocols previously available only through a trade secrets license.

It also pledged not to sue open-source developers that use Microsoft technologies in non-commercial applications.

The EC's announcement of the fine comes on one of the biggest product launch days in Microsoft's history. The company today is set to formally introduce Windows Server 2008, SQL Server 2008, and Visual Studio 2008.

In a statement, Microsoft officials said, "These fines are about past issues that have been resolved." They added that the company is "reviewing the commission's action" but declined to comment further.

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