EU concerned about Microsoft compliance, $5 million daily fine possible

March 21, 2005

Bill Gates's Microsoft could be fined as much as 5.0% of its daily income, roughly US$ 5 million per day according to Wall Street Journal calculatations, if it does not comply with demands set by the European Commission. The commission investigated Microsoft's practice of bundling the Windows Media Player software into the Windows operating system in 2003-2004, a practice which rivals complained was destroying the market for their own products. The Wall Street Journal reported Monday a week ago that the European Commission would decide their course of action in two weeks time.

Negotiations between Microsoft and the Commission broke down in March 2004 and the company was subsequently fined a record €497 million (US$ 613 million) for its breaches of EU competition law.

The ruling is subject to appeal, but a European Court decided in Dec 2004 that fines imposed on Microsoft by the EU would not be delayed. Microsoft paid the €497 million fine and must now ship versions of Windows without Windows Media Player. It was also decided by the EU court that Microsoft must license many of the protocols used in its products to developers in countries within the European Economic Area.

The European Commission rejected today a proposal by Microsoft to license its workgroup server software protocols. These protocols would allow programmers to build server programs that are compatible with systems and PCs running the Windows operating system. Influencing the decision were complaints from the Free Software Foundation Europe (FSF Europe), which said the per-server licensing proposal violated the principle that the protocols could be used to develop free software, because there is no way of knowing how many servers will be using free software.

"Microsoft either doesn't understand or doesn't want to understand the idea of free software," said FSF Europe spokesman Joachim Jakobs.

Jakobs explained that as free software is freely distributed, it is impossible to predict the extent of its use. Also, authors of free software would encounter copyright issues with Microsoft when using the protocols to distribute their software. Microsoft stated last Friday that it is still trying to find the balance between the need to preserve the private interests of Microsoft and the public interests.

Earlier, the European Commission rejected Microsoft's proposal to release the new Windows Media Player-free version of Windows under the name "Reduced Media Edition." Microsoft is now investigating other names suggested by the Commission. It is still unclear whether a deadline is or will be set for the demands by the EU.