EU fines Microsoft $732M over browser ballot debacle

Microsoft monitored itself, says EU, and failed to notice it wasn't showing consumers a choice screen for more than a year (see video below)

European Union antitrust officials today hit Microsoft with a $732 million fine for failing to live up to a 2009 settlement that requires it to offer Windows users a choice of alternate browsers.

The announcement made by Joaquin Almunia, the European Commission's top antitrust regulator, had been expected after the New York Times reported Tuesday that a "large fine" was imminent in the eight-month-old case.

It was the first time that Europe's regulators had punished a company for shirking an antitrust agreement, something Almunia noted last year and again today.

"This is the first time we have seen a breech of a legally binding commitment," said Almunia during a Wednesday press conference from Brussels. "This is, of course, serious, whether it was intentional or not."

The settlement reached in late 2009 stemmed form a complaint by Norwegian browser maker Opera Software, which two years earlier accused Microsoft of manipulating the battle for browser share by tying Internet Explorer (IE) to Windows. After some arm twisting, including a threat to delay the then-upcoming Windows 7, Microsoft agreed to show European users of its Windows operating system a "browser ballot," a screen that displayed download links to rivals' browsers, including Google's Chrome, Mozilla's Firefox and Opera's namesake.

But Microsoft made a big mistake: It failed to display the browser ballot to users of Windows 7 Service Pack 1 (SP1) for some 14 months, from May 2011 until July 2012. Approximately 15.3 million users did not see the ballot as they should have, said Almunia.

Last July, Microsoft acknowledged the oversight and apologized, but also downplayed the problem, saying it had been purely a "technical error" and blaming an engineering team.

In October 2012, Almunia filed formal charges against Microsoft, saying, "If companies enter into commitments, they must do what they have committed to do or face the consequences."

He said much of the same again today. "It goes without saying, that settlements can only work if the commitments are scrupulously complied with," said Almunia. "They must do what they have committed to or face the consequences."

Microsoft was to provide the ballot for five years -- through the end of 2014 -- but last summer it offered to extend the time it is obligated to show the screen by 15 months.

Last fall Microsoft updated its newest operating system, Windows 8, to include the choice screen for EU customers. But at the same time the Commission also gave Microsoft a pass: It decided that Microsoft does not have to open Windows RT, the limited version built for tablets, to rivals' browsers.

The $732 million fine, equivalent to 561 million euros, was much smaller than the maximum -- it could have been as high as $7.9 billion -- and smaller, too, than some had argued should be applied.

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