As expected, the European Commission has decided to fine Microsoft for not fully complying with the 2004 finding that the company abused its monopoly position in the EU. It’s a big one, too: €280.5 million (roughly US$357.3 million at current exchange rates). In addition, the company will be fined an additional €3 million per day beginning on July 31 if it is not in full compliance by then.
In a statement, EC Competition Commissioner Neelie Kroes said that "The EU Commission cannot allow such illegal conduct to continue indefinitely. No company is above the law."
Despite the amount of the fine, Microsoft may have gotten off a bit light, as the EC had previously threatened it with a €2 million per day penalty back in mid-December. Instead, the Commission decided to fine the software giant €1.5 million per day for the period covering December 16, 2005 to June 20.
At issue is the state of Microsoft’s documentation and licensing terms for its workgroup servers. One of the stipulations of the original antitrust ruling in 2004 was that Microsoft had to open up the inner workings of its server software and allow competitors to license it so they could ship products that could fully interoperate with Microsoft’s lineup. Open source groups have criticized the company’s licensing terms while EU regulators and others who have worked on the case have said Microsoft’s documentation is abysmal.
"Microsoft did not even come close to providing adequate information," Kroes said.
Microsoft offered to license the source code in January, despite being explicitly told by the EC that it was not interested in the source code, just adequate documentation. In a statement of objections, the EC described the problems, including several hundred pages detailing how to handle errors, while failing to document how the errors happen. Another consultant spent 42 hours trying to perform relatively simple programming tasks using Microsoft-supplied tools and documentation, to no avail.
Faced with a new compliance deadline of July 18, Microsoft now has an army of 300 sweating over the details in an attempt to fully comply by then. The company alleges that it only received a "clear definition" of the documentation requirements in April and that it has hit the milestones on time. Therefore, it believes the fine is unjust. "We have great respect for the Commission and this process, but we do not believe any fine, let alone a fine of this magnitude, is appropriate given the lack of clarity in the Commission’s original decision and our good-faith efforts over the past two years. We will ask the European courts to determine whether our compliance efforts have been sufficient and whether the Commission’s unprecedented fine is justified."
Microsoft will appeal the ruling, while continuing its efforts to come into full compliance. With total fines in the case over €775 million at this point, the company has a powerful incentive to give the EC exactly what it wants.