EU Finds Microsoft Guilty Of Abusing Monopoly

cabalamat2 writes "The European Commission's draft report on Microsoft says they are guilty of abusing their monopoly position. The ruling proposes that Microsoft be fined; the amount of the fine will be decided in March or April, and the maximum fine permitted is 10% of Microsoft's global turnover, about $3.2bn. Microsoft are allowed to appeal against any judgement that goes against them, to the Court of First Instance, and it's expected they will do so, to drag out the process as long as possible."

Comments

The EU

[Johnny Mnemonic]

The EU hasn't changed their minds from a few days ago.

MS abusing its monopoly?

[lordmoose]

And in other news: Kids like to play.

But monopolies that encourage slavery are ok

[eht]

For some reason Microsoft whose only real crime is too much capitalism while DeBeers's monopolistic practices encourage slavery and for real wars.

Re:But monopolies that encourage slavery are ok

[dago]

The things which is forbidden is not to have a monopoly and do things to keep it, but to use it in an unfair way to gain over competitors in other markets.

MS did that with windows -> internet explorer, media player.

DeBeers : diamonds -> ???

Re:But monopolies that encourage slavery are ok

[Anonymous Coward]

Diamonds are needed in factories that make weapons. All countries without local diamonds fear DeBeers cutting off the supply. Industrial diamonds are sold at a fair rate unlike gem quality ones.

Re:But monopolies that encourage slavery are ok

[PainKilleR-CE]

The things which is forbidden is not to have a monopoly and do things to keep it, but to use it in an unfair way to gain over competitors in other markets.

I'm not sure what EU law is on the matter, but US law states that it is illegal to do certain things to maintain a monopoly, and, in fact, these were the easiest things to prove against Microsoft in it's antitrust case (and most of those which they were found guilty of have supposedly been remedied, or at least are remedied if Microsoft does what they were told to do by the court).

It's not just about pushing your way into other markets, but also about preventing people from entering your market. This is why Apple was ruled out as a competitor in the OS market, because the hardware platforms are themselves a barrier preventing consumers from switching from an MS OS to an Apple OS (of course, this completely ignores the fact that many (if not most) consumers simply buy a new computer instead of upgrading, but I'm not the one that made the ruling).

DeBeers has done quite a bit to prevent other people from entering the diamond market, including threatening to flood the market if someone else enters, thereby reducing the price of diamonds and (hopefully from DeBeers' standpoint) make the market unprofitable for others. Once the other company goes out of business, supplies get choked off again and the prices gradually return to previous levels.

Re:But monopolies that encourage slavery are ok

[the eric conspiracy]

Yes, but does the EU have any juristiction re: DeBeers?

DeBeers is a cartel that buys diamonds and then markets them. DeBeers' dominance comes from getting just about all diamond producers to sell to them via a wide variety of tactics.

Clearly there aren't any diamond producers in the EU.

Re:But monopolies that encourage slavery are ok

[curious.corn]

Are you smearing EU because it's not hard against De Beers just because it's an european based corp? Well, let me put this straight: perhaps De Beers is such a filthy rich beast infiltrating every western world lobby enough to keep rolling the evil business as they've always had. Perhaps there are other monopolies that stranglehold the world economy, provoke wars, make life a misery for millions of innocents (OPEC)... is EU the only hypocrite? Perhaps there are other monopolies that aren't as high profile but yet move loads of money and mercilessly hurt developing nations' people; and when their interests are challenged they lobby their Homeland governments to defend the status quo (Dole)...
Who's the hypocrite? Aren't we grown enough to know that nowhere in business is purity, virginity and morals? (in the US as much as in the EU, Russia, Far East... can I say global?)
Aren't we just quarreling with nationalistic chauvinism like Renzo's chicken (a famous metaphor in Manzoni's "I Promessi Sposi") while the fat cats are making arrangements to screw us over again?
Can we all rejoice for once that M$ is getting a little decent slap on the face? Consider that Monti, the EU antitrust official, is getting some heat for having pissed over some EU monopilies' interests so guess what will M$ do next... blow on these internal affairs fires to get rid of the idiot? Enjoy the show while it lasts instead of makin a fool of yourself playing the part of the texan redneck...

Re:But monopolies that encourage slavery are ok

[El]

You're quite correct; there are worse companies than Microsoft. However, Europe apparently still clings to it's colonial attitudes: "Well, as long as they're not killing or enslaving Europeans, why should we care?"

Re:But monopolies that encourage slavery are ok

[Prior Restraint]

It's not just about pushing your way into other markets, but also about preventing people from entering your market. This is why Apple was ruled out as a competitor in the OS market, because the hardware platforms are themselves a barrier preventing consumers from switching from an MS OS to an Apple OS (of course, this completely ignores the fact that many (if not most) consumers simply buy a new computer instead of upgrading, but I'm not the one that made the ruling).

A couple of things.

First, Judge Jackson took a CYA position and said that while he considered Apple not part of the relevant market, anyone who did would still be forced to conclude that Microsoft had an OS monopoly; their marketshare is that big.

Second, part of the barrier to migration was not only the cost of the machine, but the fact that all applications would have to be replaced (more cost), and the users' data would typically have to be converted to a new format (yet more cost).

Re:But monopolies that encourage slavery are ok

[eht]

DeBeers is headquartered in England.
England is part of the EU.

DeBeers engages in monopolistic practices (some the same as the oh so unholy Microsoft such as charging different customers different prices and maintaining prices that vastly exceed their rarity) that encourage slavery and blood/war/conflict diamonds.

There are no guaranteed "clean" diamonds.

Re:But monopolies that encourage slavery are ok

[the eric conspiracy]

DeBeers is headquartered in England.
England is part of the EU.

That's nice, but what does that have to do with DeBeers' monopolistic practices? As far as I can tell they occur outside the EU.

Wake me up in 2007

[etymxris]

When Microsoft will have finished their appeals. By that time, they will have already crushed the competitors whose misfortunes initiated this inquiry. Furthermore, new anti-trust violations will be pending on new behavior, which will not be settled for another few years.

Late justice may as well be no justice. The courts of the US and EU need to find a way to act more swiftly in such matters.

Re:Wake me up in 2007

[SpaceLifeForm]

Hey, give the EU some credit. At least they are imposing a penalty.

Re:Wake me up in 2007

[etymxris]

Hey, give the EU some credit. At least they are imposing a penalty.

Yes, I agree, this is commendable. But I seem to remember a much more severe judgement being handed down several years ago--the splitting of the company. Unfortunately, that did not survive appeal. While the current judgement is a good sign, it means nothing until the appeals have been fully resolved.

Re:Wake me up in 2007

[jefeweiss]

I think that in order to appeal they should have to up the ante. Say for each appeal you get a possible 25% added to the maximum fine. They could even fine extra for each motion filed. They could tack on extra fine based on the amount of delay. Right now they have no reason not to appeal. Even just from inflation the fine they would have to pay is 3 to 4% less each year they can put off paying it.

Re:Wake me up in 2007

[Kanasta]

What happened to the US case? I remember something about guilty, then something about everything is over

Who gets the money?

[Dr. Bent]

What I want to know is, if they do get fined $3.2 billion, who gets it? I suppose the lawyers will get thier cut before anyone else, but what are they going to do with the $2 or $3 million left after that?

Re:Who gets the money?

[Tyrdium]

I'd assume it goes to the same place taxes do: government programs, grants, etc.

Re:Who gets the money?

[gl4ss]

the lawyers are probably on salary..

this is not some usa-style class action suit... but officials doing their work.

Re:Who gets the money?

[iamcadaver]

I'm amazed iut just how /unique/ that sounds.... government salaried layers...

over here we call them legislatureres

Re:Who gets the money?

[RCO]

Pleeeeaaasssse! They will probably work out some deal where if they were fined 3.2bn or 32k or whatever, they will hand over a certain amount of software etc. to pay the fine. BTW, said amount of software will probably be the same no matter what the fine is, M$ has a way in inflating the price of their software. Of course this will be done under the guise of improving the school systems or gov. offices etc. and of course with increase M$'s market share and give them a firmer grip on their monopoly. I'm starting to think M$ likes getting sued.

Re:Who gets the money?

[Dr. Bent]

Taxes are budgeted. You don't tax people and then figure out how you're going to spend the money...you raise taxes to fulfil a specific need. So unless the EU 2004 operating budget included a line item for penalties paid from suing Microsoft, they were not expecting to get this money.

Which is why it's so important to figure out where it's going. Where it should go is into the pockets of individuals and corporations that were damaged by Microsoft's behavior. Where it will probably go is into some politican's pet pork barrel project.

Re:Who gets the money?

[nocomment]

but what are they going to do with the $2 or $3 million left after that?

Use it to pay Microsoft support to figure out why their machines are crashing. Then they will have to buy $3bn in upgrades to fix the crashing.

Re:Who gets the money?

[Finuvir]

What I want to know is, if they do get fined $3.2 billion, who gets it?

Hello my name is Mr Setag, and I come from... some place far away. Yes, that will do. Anyway I say we invest that money back in Microsoft.

A word from Shrek

[Anonymous Coward]

government salaried layers...

"No! Layers! Onions have layers! Ogres have layers! Onions have layers. You
get it? We both have layers"

Re:A word from Shrek

[RCO]

we still call them legislatureres

your screwed either way...

Re:A word from Shrek

[Anonymous Coward]

Are lesiglatureres the same as layers?

Re:A word from Shrek

[gl4ss]

the profession at least is the same.

So

[wizarddc]

If they appeal, and lose, do they also have to pay interest on their fine? They were found guilty of abusing this power now, so if they drag it out 3-5 years, do they have to pay back interest on that 3.2 billion? Wouldn't that be a deterent for the long, dragged out cases? If they have to pay a few years of coupounded interest, they might not be so lawyer happy.

*cough*

[Oriumpor]

BIAS*cough*

to the Court of First Instance, and it's expected they will do so, to drag out the process as long as possible.

Like any company anywhere given the opportunity to appeal wouldn't do so...

Monopolies are made because the financial benefits outweigh the legal risk. And because we give companies the chance to harrang a few million dollars litigiously.

Not like dumb people can sue a corporation because they spilled HOT coffee on themselves and win or anything.... Whatever happens in this case will matter little. Who cares if they are fined 10% of their revenue, subtract development and the .1% of manufacturing costs and that will probably barely even ding their bottom line.

Re:*cough*

[Anonymous Coward]

what it will probably mean is less money donated, and more money spent bying off politicians.

Re:*cough*

[tsa]

That is certainly true, therefore I hope that the EU reads /. and takes the recommendations in the article to heart. Those will have a far greater impact on MS in the long term than any fine they can come up with.

Damn Europeans!

[Lord Bitman]

Microsoft IS allowed to appeal against any judgement that goes against them.

Wouldn't work

[SmallFurryCreature]

Basic principle is that everyone is entitled to appeal their judgement. Courts have been known to be wrong and so their should be nothing put in the way of taking it to the highest court.

EU especially had some pretty stupid rulings overturned by the highest EU court.

Then again a criminal who pleads guilty generally is sentenced less then one who claims innocence and is found guilty. But this has proven very dangerous in american with innocent people pleabargening since they can't afford to prove their innocence.

Of course MS is not innocent but you can't unfortuanlly create a seperate legal system for the evil.

Re:Wouldn't work

[Acidic_Diarrhea]

"The evil"? Do you really call MS evil in the traditional, child-killing, mother-raping, sense of the word? I realize that MS is a company that has engaged in immoral business practices but to call them "evil", I think, goes a bit too far. Sure, MS steps on peoples toes and sends them packing from the industry but they're not exactly committing genocide, are they?

One of the other comments in this article mentions the DeBeers company, which raises an interesting point. The diamond industry does far more damage to the world in terms of slave labor and wars fought over diamonds than anything MS has ever done. MS has crushed competitors unfairly but also balanced their unfair profit with huge donations to charity. DeBeers has been responsible for bloodshed and the enslavement of people. Who should the courts really be going after?

I'd much rather pay money for a copy of Windows than for a diamond that some 10 year old died over.

Sorry for going off on a tangent there. You probably didn't mean to use the word evil anyway. You probably just meant guilty.

Proposed fine for MS:

[Txiasaeia]

Make them give away 3.2bn worth of Windows 95 and 3.11 copies. Better yet, send five copies of each to every household in the EU. Good grief, what right does the EU have to fine a global company 10% of their global profits? At the very most, fine them 10% of the profit they make in the EU; that at least makes sense!

Re:Proposed fine for MS:

[nelsonal]

That is their profits made in the EU, they could fine them any amount they wished, the alternative is being shut out of the market. It would be tough to collect a fine imposed on a company in a sovereign nation.

Re:Proposed fine for MS:

[El]

Fine them based on their EU profits, and you'll soon find they have no EU profits -- "Gee, we keep buying this software from Microsoft USA for $149 each, and selling in the EU for $149 each, and we're not making any money! I can't understand why!" One of the problems with Multinationals is that they can structure their transactions to make all their profits is whatever country benefits them the most.

This is NOT off-topic

[DesScorp]

Zealots are modding this guy down, but he's got a good point. While everyone wants to see Microsoft brought to heel, why is Europe so hot on monopolies now, when DeBeers has had one enforced through blood and terror for decades?

The answer, I suspect, has less to do with justice than the feeling that MS is harming Europe's native software industries.

Re:This is NOT off-topic

[Scaba]

Well, DeBeers isn't an American corporation. I'm sure if Cheney, err, Bush, would have backed off on Iraq, the EU would have backed off a bit on MS (though I doubt they would have bent over for MS like the US did).

Re:This is NOT off-topic

[eht]

I'm getting modded down for a couple reasons, I didn't say anything about how great Linux is, I pointed out that Europe is full of weenies just like everywhere else, I didn't bash Microsoft enough.

Then again I didn't say anything pro Microsoft either, I was just pointing out how if you want to go after real problems in the world, Microsoft is nearly the least of them.

Re:This is NOT off-topic

[Anonymous Coward]

Well, DeBeers isn't an American corporation. Notice the subject here is EU Finds Microsoft Guilty Of Abusing Monopoly. EU stands for Europian Union. Europe isn't in America either.

Re:This is NOT off-topic

[squiggleslash]

No, it's off topic. It'd be like arguing that someone convicted of embezzling funds from their employer is in some way being harshly treated because they haven't convicted Kenneth Lay of anything.

DeBeers is obviously rather good at evading responsibility for their actions. Countries in Africa, Europe, and North America all, theoretically, are touched by DeBeer's actions yet have taken no concrete steps to deal with them. Why is anyone's guess, but given the outcry over their business practiceses in general, I seriously doubt it's due to an unwillingness to deal with them.

Re:This is NOT off-topic

[Anonymous Coward]

Isn't Europe that state just East of Rhode Island? I saw a thing on the discovery channel about it once.

Re:This is NOT off-topic

[Scaba]

Perhaps if you took the time to read all 42 words of my posting before firing off a reply, Anonymous Coward, you'd see that my speculation is that the EU is making MS, one of the largest US corporations, pay for the crimes committed in Iraq by the US. It follows logically that, since DeBeers is not a US company, the EU has no such incentive to make them pay. The implication is that the EU wants to send a strong message to the US essentially saying "You want to ignore us when we tell you not to invade Iraq? Well, try ignoring the USD3.2 billion we're taking out of your already floundering economy." IMHO, of course.

(In case you have the same trouble reading far enough into a news story as you did my 42-word post: Iraq is a country in the Middle East which, in addition to having the world's second-largest oil fields, was so shamefully invaded under orders of a man - a lrage part of whose fortune is attributed to oil - under the pretense of finding weapons of mass destruction, I mean ousting Saddam Hussein, I mean liberating the Iraqis, I mean creating a democracy, I mean...)

Re:McDonald's coffee lawsuit

[Anonymous Coward]

*chuckle*

Hey, would now be a good time for me to point out that Al Gore said "On January 24th, 1987, I personally invented the Internet"?

Re:McDonald's coffee lawsuit

[Anonymous Coward]

Why is Microsoft being singled out? Why not Apple? After all, their users have to use one-button mice. Can you believe that?

% of global turnover?

[Smack]

How is that fair? Shouldn't it be related to how much business they do in the EU?

Re:% of global turnover?

[squiggleslash]

Well, yeah, they could instead fine Microsoft 100% of European revenues. Would that make you happier?

I think the point is to create a deterent without it being meaningless for companies that barely trade in the EU, or likely to cause bankruptsy for anyone who trades exclusively there.

Re:McDonald's coffee lawsuit

[jefeweiss]

People bring up this case all the time without taking the time to find out what the details were. When it was all said and done no one got "filthy rich" off that case. The original damages awarded by the jury were reduced by the judge. And the woman who spilled the coffee had third degree burns all over her legs. You could spill coffee from your home coffee maker on your legs all day long and not get anything worse then a big red patch of skin.

Re:McDonald's coffee lawsuit

[Anonymous Coward]

YHBT. Ask yourself what the f--- the McSuit had to do with this story or even the posting being replied to?

Then she should not have spilled it

[Anonymous Coward]

"And the woman who spilled the coffee had third degree burns all over her legs."

Then she should not have spilled it. At least we admit that none of this is McDonald's fault: she did the spilling.

Will the directors be liable?

[tiger99]

In certain European countries company directors do not enjoy the immunity from some aspects of the law that they do in the UK, and even more so, the US.

I wonder if this means that Sir Bill is heading for the Bastille?