Microsoft: $610M EU fine too big

IDG News Service - Microsoft Corp. will be fined $610 million by the European Commission on Wednesday for abusing its monopoly in computer operating systems, a person close to the company said today.
The fine, which was set late last week after settlement talks with Microsoft broke down, was backed by national competition regulators from the 15 European Union member states today.
Microsoft said the fine is too big. "In view of the absence of a clear legal standard under EU law, a fine of this size isn't warranted," said Tom Brookes, the company's spokesman in Brussels.
The fine will be discussed tomorrow by senior aides to all 20 commissioners before being brought to the commissioners' meeting on Wednesday morning. Microsoft will then be officially informed of the fine and sent a summary of the ruling by fax, shortly before competition commissioner Mario Monti holds a press conference to announce the decision.
"We have already told Microsoft many times that a negative ruling will incur a fine," said Amelia Torres, Monti's spokeswoman."A small company could claim it didn't know the rules, but not one the size of Microsoft."
The European Commission is expected to rule that Microsoft abused the monopoly position of its Windows operating system twice. By withholding vital information about Windows from makers of server software, the company gained an unfair advantage in that market, and by bundling its Media Player software into Windows, it competed unfairly, the ruling is expected to find.
The commission is expected to announce remedies to restore competition in these markets. Microsoft will likely be ordered to sell two versions of Windows to PC makers in Europe, including one with Media Player stripped out. The company is also likely to have to share more secret Windows code to allow rival server software makers to compete more fairly, according to people close to the case.
These remedies are much more important than the fine in terms of the effect on Microsoft, some analysts said. The company has over $50 billion in cash reserves and has already set some of that aside for covering legal costs.
Wednesday's ruling will set a precedent that could strengthen any legal challenge of alleged monopoly abuse by Microsoft. Development of the next generation of Windows, which is code-named Longhorn, could also be affected, some analysts said.
After talks collapsed last Thursday, Brad Smith, Microsoft's chief counsel, said the company will appeal the ruling at the European Court of First Instance.