EU Hits Microsoft With Record Fine

The European Union declared Microsoft guilty of abusing its "near monopoly" with Windows, hitting the software giant with a record fine of $613 million and demanding a version of Windows without Windows Media Player and the release of code.

Microsoft Corp. has been hit by record fine of 497 million euros ($613 million) by the European Union for abusing its dominant market position with Windows. The company has also been ordered to effectively offer to manufacturers a version of Windows without Windows Media Player.

The previous highest fine in EU history was 462 million euros against Hoffman-La Roche in 2001, in a case that centered on the operation of a vitamin cartel. The previous largest fine in a case involving market dominance was 75 million euros. However, this fine is significantly less than the $3 billion the EU could have levied against Microsoft, based on 10 percent of its worldwide revenues.

/zimages/4/28571.gifMicrosoft senior VP Doug Burgum sounds off on the EU. Read what he said.

According to Mario Monti, the European Competition commissioner, Microsoft had abused its dominance of the operating systems market both by tying Windows Media Player to Windows and by failing to release information about Windows to competitors in the server market. The company now has 120 days to provide information to other server vendors and 90 days to provide a version of Windows without Media Player.

The commissioner also ruled that Microsoft must supply the version of Windows lacking Media Player without any commercial or technological handicaps that would have the effect of "rendering the unbundled version of Windows less attractive or performing. In particular, it must not give PC manufacturers a discount conditional on their buying Windows together with the Windows Media player," he said.

"Dominant companies have a special responsibility to ensure that the way they do business doesnt prevent competition on the merits and does not harm consumers and innovation," Monti claimed.

Next page: Microsoft attacks the decision.