The EC Saga Continues as Microsoft Appeals $1.4 Billion Fine

Published: May 14, 2008

by Alex Woodie

Just as you thought Microsoft was ready to puts its European antitrust problems behind it, the software giant decides to appeal the $1.4 billion penalty the European Commission imposed in February. While details on Microsoft's motives are slim, it appears that the company may argue that the EC was heavy handed with its penalty, which was announced just one week after Microsoft unveiled its "Four Principles of Interoperability" promise to give away thousands of pages of technical information at the center of the issue.

Ever since the EC's landmark March 2004 decision, Microsoft and the EC have been at odds over how easy Microsoft should make it for third-party developers to obtain technical details of the "workgroup server protocols" needed to write client-server applications for Windows, and at what cost.

Microsoft finally conceded to the EC last October--several weeks after losing its appeal of the EC's original March 2004 decision in Europe's second highest court--when it slashed the price it charges for protocol information.

In February, Microsoft clearly was in retreat (i.e. EC compliance) when it released its Four Principles of Interoperability along with 30,000 pages of technical documentation and a promise to be more open and less secretive.

However, a week after the Four Principles announcement, the EC decided to fine the company anyway. The fine was €899 million, or about $1.37 billion at exchange rates from last October. At current exchange rates, the fine amounts to $1.39 billion. Microsoft had already paid the EC more than a billion dollars in previous fines.

The EC imposed the fine on Microsoft for taking so long to comply with its original ruling in March 2004, and for reaping the rewards of a monopoly as it dragged its feet in Europe's antirust courts. Even though Microsoft finally took the steps the EC directed it to, in the eyes of the EC, it was simply a case of "too little too late."

Now, Microsoft is hoping the European court system will take pity on it and reverse or lower the February fine, and it's likely going to lean heavily on its Four Principles in forming its arguments.

There is still other unfinished business between Microsoft and the EC. In January, the EC opened a fresh investigation of Microsoft regarding the way it supplies interoperability information for the Office suite, server products, the .NET Framework, and its new Open XML format.

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