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Microsoft Hit With 280m Euro Fine
Craig Mason writes "The BBC Reports that "Microsoft has been fined 280.5m euros ($357m; £194m) by the European Commission for failing to comply with an anti-competition ruling.
The software giant was hit by the fine following a long-running dispute between the US firm and EU regulators.
The move follows a landmark EU ruling in 2004, which ordered Microsoft to provide rivals with information about its Windows operating system.
EU regulators also warned Microsoft it could face new fines of 3m euros a day.""
What happens if they don't pay?
What happens when anybody doesn't pay an outstanding court-ordered fine? Likely they'd just freeze their assets in Europe until it's paid. In extremis they'd sell off assets to cover the amount.
Don't forget, this is a court-ordered fine - a punishment - upheld after an appeal. Nonpayment really is not an option. It will not come to that of course; just imagine what such an action would do to their credit rating and reputation.
Trust the Computer. The Computer is your friend.
The idea is that the EU claims (rather correctly, and you'll see why this is not an issue) that MS used it's desktop monopoly to attempt to gain a monopoly in the media player market. They were then forced to unnbundle WMP, which they did in Windows N. Also to pay that original fine we already heard about last year.
Now here's where you lost the trail; the contention now is NOT ABOUT WINDOWS MEDIA PLAYER. It's about underlying windows APIs that the EU claims MS is leveraging to use their DESKTOP os monopoly (which is okay) to shoehorn their way higher up in the server space. What they required MS to do was provide their competition with information about the windows OS that would let competing products interoperate as smoothly as microsoft products.
It's kind of a convoluted, complicated, and misreported case. The EU commision is saying "Look, you can't hide these details about your desktop os just so nobody can make a (whatever server) as good as yours, you can make the whatever server, but your competitors need to have equal footing. SO tell them how (whatever) works."
theres a bunch more, 12000 pages of docs, source code sharing (under a restrictive license competitors must pay for, this is more complicated due to the possibility of DMCA claims) etc.
I know you're joking, but large companies really do have a "credit rating" -- it's called their bond rating or bond score. They don't just go to a bank and borrow money, they basically write their own fiat currency (bonds) and sell them to raise capital. Depending on the perceived health of the company, the bonds are perceived as more or less risky.
I don't know Microsoft's offhand, but I'm betting it's pretty good...not that they need to raise capital, with the amount of money they have sitting around.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
Market cap is not the important figure here, since that doesn't represent the actual capital that MSFT has on hand, but rather the market valuation of their shares. It's the income statement you want to look at.
For the FY ending 6/30/05, MSFT had a net income of US$ 12.2 billion. So, a fine of US $357 million IS significant -- it's roughly 3% of their net income.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
In fact, as with any situation where supply is (actually) relatively inelastic, if the supply side suddenly increased the price would drop dramatically. If Bill wanted to sell all his shares on Monday, how much do you think he would get for them? A lot, but nothing like the current price. The shares would be suspended as they started to go into freefall. Goes for houses, goes for Rembrandts, goes for shares. At one time during the Tokyo land price boom, Tokyo was capitalised at more, I believe, than the entire real estate of the US. Would you have swapped the US for metropolitan Tokyo?
Microsoft's market capitalisation is unimportant and meaningless; what matters is the effect of ongoing fines on their day to day operations, the market perception, and the buying decisions made by large institutions who will be reading all about it in the FT, Handelsblatt etc.
Pining for the fjords
Since you cant put a corporate entity in jail...
In the EU you can, sort of. Certainly in the UK, the board of directors are held directly responsible for the actions of the company. For example, there is a charge of "corporate manslaughter" here where the directors of a company can be put into prison for manslaughter if it can be shown that any deaths were caused by the actions of the company.
Put simply, if MS do not pay the fine, then the minute Bill Gates, Steve Ballmer, or any of the top brass set foot in the UK (and most likely other parts of Europe too), they would be immediately arrested for non-payment of fines.
Bob
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It also affects their ability to do certain types of business. Refusing to pay a fine like this automatically adds them on various blacklists that at least a lot of governmental agencies and large corporations do follow and means they'd be ineliglible for contracts with those organizations.
Trust the Computer. The Computer is your friend.
Form a group with your fellow 2nd world countries.
Have you ever compared the GDP of the EU with that of USA?
I'll probably be modded down for this...
...next they'll be fining car manufacturers for selling cars with a specific brand of stereo/sound system and being anti-competitive.
Your knee-jerk argument doesn't really hold up. Let's try some slight modification and see if we can get it to work, eh?
Imaging one car manufacturer was responsible for producing 95% of the cars in circulation and aggresively used its position to limit the availability of cars from other manufacturers or the emergence of new manufacturers.
Imagine they not only bundled their own brand stereo with the car, they made it virtually impossible to remove the stereo system without causing severe damage to the car, so that even if you were to install an additional stereo you'd have to keep the original stereo.
Now imagine the car manufacturer starts using its imense wealth and market position to persuade content providers to release music encoded in a format only the above stereo can play (or charging hefty license fees to the smaller car/stereo manufacturers if they want to use this technology themselves to actually be able to play music).
Finally, imagine the car manufacturer went out into the world and used its wealth to influence political decisions in their favour to help them maintain an effective stranglehold on the market and, at the same time, insidiously "educate" people while they're still at school into thinking that only one car manufacturer can give them what they need.
Hope that helps.
Competition: Commission Decision of 12 July 2006 to impose penalty payments on Microsoft - frequently asked questions
What is Microsoft required to do?
The European Commission's Decision of March 2004 required that Microsoft take various steps to put an end to its illegal and anti-competitive conduct (see IP/04/382 and MEMO/04/70). These included obligations to:
On 10 November 2005, the Commission warned Microsoft, pursuant to Article 24(1) of Regulation 1/2003, that should Microsoft not comply with these obligations by 15 December 2005, it would face a daily penalty payment of up to 2 million (see IP/05/1695). Article 24 of Regulation 1/2003 entitles the Commission to impose such penalty payments not exceeding 5% of average daily turnover in the preceding business year per calendar day to compel companies to put an end to infringements of EC Treaty anti-trust rules, where an infringement has been established by a previous Commission anti-trust decision.
Why has the Commission levied a penalty payment for non-compliance on only the failure to provide interoperability information, and not the terms on which that information is provided (i.e. the first and not the second of the two points from the 10th November 2005 Article 24(1) Decision)?
As regards the provision of information on reasonable terms, Microsoft has announced that it will review the pricing of its protocols once revised technical documentation has been submitted. Furthermore, a final assessment on the degree of innovation, if any, that is contained in the interoperability information, and hence the reasonableness of the royalties that Microsoft charges, can only be made once the technical documentation embodying that interoperability information is complete and accurate.
Why has the Commission decided that the fine levied should be 1.5 million per day?
Of the two elements of non-compliance identified in the Article 24(1) Decision, complete and accurate interoperability information is a prerequisite for interoperable work group server operating systems to be developed. Microsoft's non-compliance in this regard has eliminated the effectiveness of the remedy. Consequently, the Commission has taken the view that failure to comply in this respect should at this stage constitute a larger part of the daily penalty payment identified in the Article 24(1) Decision of 10 November 2005.
Why has the Commission taken today's Decision given that Microsoft is in the process of preparing revised technical documentation?
Microsoft's obligation was to comply with the March 2004 decision's requirement to make available the relevant technical documentation as of June 2004. As of 20th June 2006, Microsoft had not done that, and the Commission decided that it was appropriate to levy a fine on Microsoft for its non-compliance so far.
More than two years after the 2004 Decision, the Commission has therefore been obliged to resort to formal measures to ensure compliance. If any revised documentation that Microsoft submits proved to be complete and accurate, then Microsoft would not be subject to further daily penalty payments from the date on which complete and accurate technical documentation was provided. This would be the best outcome. However, if Microsoft continued t
At least give credit where it's due! And don't try to pass it as a true court transcript or whatever...
The AACS key is NOT 0xF606EEFD628B1CA427BEA93A9CA9773F