The EU case against Microsoft is getting harsher by the day. The latest word is that the company will indeed be fined for not supplying requested information in a timely manner, with fines backdated to December 15, 2005, at €2 million a day. That’s the current ceiling on the fines, set in the original ruling, but some sources also say that this cap may be raised to €2.5 million or even €3 million a day. That comes out to a maximum about €600 million in total, if Microsoft settles the matter today. Further delay would, of course, also increase the financial hurtin’.
Microsoft continues to claim that the fines are “unjust” because the European Commission wasn’t clear about exactly what information it wanted. EU spokespeople counter that argument by pointing to the two years Microsoft has been afforded for getting their act together. The company claims to be working furiously at collecting the material, and that a final release is due any day now, but some people think that it’s all hot air. “We’ve heard that before and that wasn’t true,” says an unnamed Microsoft competitor. “Why should we believe them now?”
In that light, it looks like the EU is slapping Microsoft a good deal harder than anyone expected, least of all Microsoft. €3 million a day isn’t chump change even for one of the biggest companies in the world, as it translates into about US$1.4 billion at today’s exchange rates. That’s 3.3 percent of the company’s total sales over the last twelve months, or 10.4 percent of its profits. Shareholders would not be happy with fines that large, and that even ignores the princely sum of €497 million Microsoft already paid out to settle the judgment.
I’d say that Microsoft now has a powerful load of incentives to comply with the information request part of the order, above and beyond the original order. Surely these top-secret documents, if made public, couldn’t possibly cost the company more than what it costs to pay these fines indefinitely. If the problem truly lies in difficulties gathering the required info, it’s also a great incentive for improved documentation standards.