EU to hit Microsoft with 'large fine' Wednesday, says report

Computerworld - European antitrust regulators will slap Microsoft with a "large fine" Wednesday for failing to live up to a 2009 settlement that requires it to offer Windows users a browser ballot, the New York Times reported today.

According to the newspaper, the European Commission is expected to announce fines tomorrow in the eight-month-old investigation into Microsoft's omission of a browser choice screen.

Today's report added to a drumbeat of looming penalties, first sounded last week by the Reuters news service, which said that European officials would impose a fine before the end of March.

The browser ballot was the result of a deal Microsoft struck with the Commission in late 2009 after officials fielded a complaint from Norwegian browser maker Opera Software. Opera accused Microsoft of manipulating the battle for browser share by tying Internet Explorer (IE) to Windows.

Regulators agreed, and after some arm twisting, forced Microsoft to display a screen in Windows that provided download links to other browsers, including Apple's Safari, Google's Chrome, Mozilla's Firefox and Opera Software's Opera. The browser ballot was to appear in all versions of Windows, including the then-new Windows 7.

But Microsoft dropped the ball: It did not show the browser ballot to users of Windows 7 Service Pack 1 (SP1) for a year-and-a-half, from February 2011, when the service pack debuted, to early July 2012.

Last summer, when the Commission announced it was investigating, Microsoft immediately apologized, but called the failure a "technical error" and blamed the oversight on an engineering team.

Since then, and continuing into October 2012, when the Commission filed formal charges against Microsoft, Joaquin Almunia, the agency's top official, has talked tough, noting that Microsoft's behavior was unprecedented and saying, "Companies should be deterred from any temptation to renege on their promises."

But few believe that the Commission will impose the maximum fine, which under the law could reach nearly $9 billion.

"Given the settlement mentality of the Commission, I wouldn't expect the maximum," said Robert Lande, a law professor at the University of Baltimore and director of the American Antitrust Institute. "The Commission has never done 10%, they just don't do that," Lande added, referring to the EU's maximum penalty of 10% of a company's revenue during the time it is found in violation of the law.

But Lande argued that Almunia should swing a big stick rather than just talk softly to Microsoft.

Calling the $2.5 billion that Microsoft has paid out in fines to the EU "chump change," Lande made a case that neither those fines, nor the approximately $5 billion Microsoft spent in the U.S. settlement of 2001, were enough to ensure the company toed the line.