EU planning massive fine against Microsoft
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The ruling, which is set to be announced on Wednesday, is expected toinclude a fine approaching $617 million (500 million Euros), accordingto a source. In addition, the commission is expected to endorse itspreliminary finding that Microsoftabused its monopoly power and to order the company to offer a versionof Windows without Windows Media Player. Microsoft would also be required to make it easier for rivals to interact with its server software.
The European Commission could have fined Microsoft up to 10percent of its annual revenue, or more than $3 billion. Even theproposed fine, which is said to be $613 million, would be a recordpenalty for European regulators.
Microsoft, which sought to settle the case, said it feels a fine of thatmagnitude is unwarranted.
"Microsoft and the commission worked very hard and in good faith to tryand resolve the very complex legal issues around this case," said spokesman Jim Desler. "It's hard to see how a fine of thismagnitude could be warranted under these circumstances."
Ahead of the ruling, Microsoft indicated it is likely to appeal the commission's decision. The company would first seek a stay of any penalties from the European Court of First Instance and could eventually appeal to the European Court of Justice.
"Obviously we do not agree with the commission in several key areas," Desler said. "It's very likely we will seek review by the courts." Any appeal would also seek a reduction or elimination of the fine.
Even if the appeals were rejected, Microsoft would have no problem paying a fine. The companyheld $52.8 billion in cash and short-term investments as of Dec. 31.
"It's a dent in quarterly earnings," said Directions on Microsoftanalyst Matt Rosoff. "It's not going to significantly affect Microsoft'sfuture business."
The fine, Rosoff noted, is less than the $750 million that Microsoftagreed to pay AOL Time Warner (nowrenamed Time Warner) last year to settle that company's private antitrust suit.
The real issue, Rosoff said, is whether European regulators should be able to affect Microsoft's future ability to add features into Windows.
Microsoft has indicated it may have agreed to settle the current issues raised by the EU, but was not prepared to agree to similar limits in the future.
"I think the problem here is the EU is determined to restrictMicrosoft's future behavior. They want to say what Microsoft can andcannot do when it comes to bundling future features," Rosoff said."Microsoft's core belief is that they are the only one with a right todetermine what goes in Windows."
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