Microsoft fined $733M for failing to keep EU deal

European Commissioner for Competition Joaquin Almunia called Microsoft's breach "a very serious infringement."
European Commissioner for Competition Joaquin Almunia called Microsoft's breach "a very serious infringement." (VIRGINIA MAYO / AP)
European Commissioner for Competition Joaquin Almunia called Microsoft's breach "a very serious infringement."GALLERY: European Commissioner for Competition Joaquin Almunia… (VIRGINIA MAYO…)
By Toby Sterling, Associated Press
Posted: March 07, 2013

AMSTERDAM - The European Union has fined Microsoft Corp. $733 million for breaking a pledge to offer personal-computer users a choice of Internet browsers when they install the Windows operating system.

The 561 million euro penalty imposed by the European Commission is a first. No company had ever failed before to keep its end of a bargain with EU authorities.

In 2009, Microsoft struck a broad settlement with the commission to resolve disputes over the dominance of Windows that had spanned more than a decade.

The company agreed to pay 860 million euros and promised to give Windows users the option of choosing another browser rather than having Microsoft's Internet Explorer automatically installed.

But Microsoft failed to stick to the deal for about 15 million installations of Windows 7 in Europe from May 2011 to July 2012. The company admitted the failure last year, saying it was a mistake.

The commission's top competition regulator, Joaquin Almunia, said at a news conference in Brussels, Belgium, on Wednesday that the fine reflected the size of the violation and its length. It was also intended to make an example of Microsoft. The commission could have fined Microsoft up to 10 percent of its global annual sales during the period of the violation.

"A failure to comply," Almunia said, "is a very serious infringement that must be sanctioned accordingly."

Keith Hylton, a professor of law and antitrust specialist at Boston University, said the fine was "far in excess of any benefit Microsoft could have gotten from the error and vastly in excess of any harm to EU consumers, who are all aware of alternatives to Internet Explorer."

Microsoft was apologetic. "We take full responsibility for the technical error that caused this problem and have apologized for it," the company said in a statement. "We provided the commission with a complete and candid assessment of the situation, and we have taken steps . . . to help avoid this mistake - or anything similar - in the future."

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