Microsoft's board sued by shareholder, not happy with IE fine by EU

Microsoft's massive 2013 fine from the European Union is the center of a new lawsuit against the company's board of directors. Reuters states that the lawsuit was filed on Friday by a shareholder of Microsoft, Kim Barovic, who claims that the board and company executives mismanaged the situation that led to the fine, which involved Microsoft breaking its 2009 agreement with the EU over its Internet Explorer web browser.

During that year, Microsoft made a deal with the EU to give owners of Windows-based PCs a ballot that would display many different web browsers to download, including Microsoft's own Internet Explorer. However, Microsoft later admitted that a "technical error" did not display the required browser download ballot on a number of PCs in Europe for a lengthy period from 2011 to 2012.

The EU was not pleased that the agreement had been broken and in March 2013 it fined Microsoft 561 million euros, or $732 million. Reuters reports that in her lawsuit, Barovic said she asked Microsoft to investigate how the "technical error" took place and take action against any board members and executives who had not performed their duties. Microsoft later replied to her that they found no cause to take action against any current or former board members or executives. Now Barovic is suing the board, claiming their investigation was insufficient.

In its own statement, Microsoft said:

Ms. Barovic asked the board to investigate her demand and bring a lawsuit against the board and company executives. The board thoroughly considered her demand as she requested and found no basis for such a suit.

In 2012, Microsoft did not pay the full amount of bonus money that could have been received by CEO Steve Ballmer and Windows division head Steven Sinofsky during that year. This was due to what the company's board said was the "Windows division's failure" over the lack of a web browser ballot for some European PCs. Neither Ballmer nor Sinofsky work at Microsoft anymore, although Ballmer is still a member of its board.

Source: Reuters | Image via Microsoft

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Sigh... every year people argue about this. Like if it was difficult to find the reasons why Microsoft was being sued by the EU, the whole ballot and the second sue...

i'm not gonna explain anymore the above, go search in the web because it in there for the past years - the reasons, the fundaments, everything. Microsoft was charged, found guilty and payed the price on both the occasions. This new suit comes late, because i found that they took the whole situation very lightly; i mean they infringed an agreement (for what, 14 months straight ?) and there wasn't anyone to blame? Not even the board knew the details of why they infringed that agreement, knowing that an infringement could mean a heavy sue?

Also i find worrisome that people are defending a company in a case where it was clearly monopolizing the competitors; i though that everyone wanted fair trade, eh?

I don't undestand EU. its like fining google for not including option for choosing default browser on android. or Chromebook for not having IE

Why the hell is everyone trying to fail MS? I don't understand how including their own browser and not showing the ballot was anti competitive. Browser is an integral part of OS experience. Its one of the features. If that is what we call anti competitive then every features including Media Player, Disk Defragmenter and so on should mean anti competitive for the market right?

"The EU was not pleased that the agreement had been broken..."
I am sure the outrage over this severe injustice, so terrible that the EU surely can barely endure the thought of it, will not be quelled during the collection of that paltry $732 million.
Justice has no price, and the EU's battered pride over bring treated in this way shall persist long after the damage from Microsoft's victimization has been painstakingly repaired. Who knows how long these effects will remain?

There is no true justification for the EU's fines. They have the power to extort Microsoft, and are flexing their, power to do so.I understand the shareholders frustration in this as well, as it has effects on her shares.

Showan said,
There is no true justification for the EU's fines. They have the power to extort Microsoft, and are flexing their, power to do so.I understand the shareholders frustration in this as well, as it has effects on her shares.

I am afraid you missed the point; the fine was about MS not in compliance with what they agreed upon. The shareholder lawsuit is about mismanagement.

I personally find the entire thing silly to begin with. It is their product after all. Perhaps Apple should be required to do the same for OS X?

The browser ballot was a punitive measure taken to address Microsoft's abuse of the market and designed to avoid a fine. Apple was not required to do the same as it had not abused the browser market. It wouldn't make sense to punish Apple for something Microsoft did. However, Apple did abuse the ebook market and was forced into a settlement by the EC (again avoiding a fine).

Companies have to abide by the laws of the countries / territories they operate in. Microsoft failed to do so. I mean by your logic it would be fine for Microsoft to take all your credit card details and sell them on to scammers because it's "their product after all".

Grinch said,
I personally find the entire thing silly to begin with. It is their product after all. Perhaps Apple should be required to do the same for OS X?

What is Apple OS market share?....

Cosmocronos said,
What is Apple OS market share?....

Seeing as nobody else can make a Mac, 100%. Snarkyness aside, look at the marketshare trend over the years in the EU versus the rest of the world that doesn't have that silly ballot screen. Not much difference. Seeing as us poor non-ballot people aren't protected, how is it that other browsers like Chrome are skyrocketing, even with Microsoft shoving IE down everybody's throat with no say in the matter? Where's the "abuse" again?

theyarecomingforyou said,
I mean by your logic it would be fine for Microsoft to take all your credit card details and sell them on to scammers because it's "their product after all".

Why would Microsoft want to copy Google's business model?

so you mean EU is trying to increase OS X's marketshare? And google's in every product area.

What about google asking you to install Chrome from their search engine? isn't that anti competitive? Google Search is a monopoly just like Windows.

Edited by surjair, Apr 14 2014, 5:59am :

Max Norris said,

Seeing as nobody else can make a Mac, 100%. Snarkyness aside, look at the marketshare trend over the years in the EU versus the rest of the world that doesn't have that silly ballot screen. Not much difference. Seeing as us poor non-ballot people aren't protected, how is it that other browsers like Chrome are skyrocketing, even with Microsoft shoving IE down everybody's throat with no say in the matter? Where's the "abuse" again?

It seems that you missed the point: I replied to a, rhetorical, question about Apple not required to offer a choice for the browser to be used in the OS.

Cosmocronos said,

What is Apple OS market share?....


same goes to android, Has majority of market share, why android doesn't let you choose your browser?

IE needs to be f#cked off right about now.

Yours sincerely,
Web designers who need to facilitate extra lines for this POS.

haha -__-

mk1990 said,
IE needs to be f#cked off right about now.

Yours sincerely,
Web designers who need to facilitate extra lines for this POS.

haha -__-

Thanks for further enforcing my opinion about web guys.

elenarie said,

Thanks for further enforcing my opinion about web guys.


please don't generalize us. That guy is obviously a 3rd rate web developer who only knows how to use some scripts.

Crimson Rain said,

please don't generalize us. That guy is obviously a 3rd rate web developer who only knows how to use some scripts.

I am aware that is not smart, but still, it is sad how some people are and how badly they represent their 'profession'. On top of everything that one can do through libraries which require minimum knowledge to utilise, on top of all the what-you-see-is-what-you-get stuff, you still have people complaining for some incredibly minor and silly things.

elenarie said,

I am aware that is not smart, but still, it is sad how some people are and how badly they represent their 'profession'. On top of everything that one can do through libraries which require minimum knowledge to utilise, on top of all the what-you-see-is-what-you-get stuff, you still have people complaining for some incredibly minor and silly things.

Well when you write a modern sleek CSS 3 site only to have jack*ss with a locked corporate desktop with IE 7 complain your work is crap go work for free for a week and downgrade your site or I'll sue for breach of contract! Then let's see how your opinion still is?

IE 11 breaks any site made with flash cs2.

Every other browser works fine. Only IE has trouble or some aunt of the customer with an old version freaks out and always blames YOU not her browser

Lets see you write a site with advanced html5/css3 stuff and have it work on firefox 2 or chrome v5 without using helper scripts that works as a fallback.

And making site with flash cs2. How very professional. ROFLMAO.

Yes, you ARE to be blamed if you fail to test your solution on all browsers that your customer's target audience are using and fail to provide fallbacks.

Crimson Rain said,
Lets see you write a site with advanced html5/css3 stuff and have it work on firefox 2 or chrome v5 without using helper scripts that works as a fallback.

And making site with flash cs2. How very professional. ROFLMAO.

Yes, you ARE to be blamed if you fail to test your solution on all browsers that your customer's target audience are using and fail to provide fallbacks.

For the record I am not a professional web developer. But I know many who are in my field.


I would hate IE too if I had to put up with that and yes customers SHOULD let you know the specs ahead of time. Many do not. Sometimes your client uses IE 9 and it works and gives you a pat and then some department has IE 6 and freaks out and blame when it doesn't work and expects you to work for free to fix it.

IE has earned much hatred for good reason. No other browser has these problems. Only IE. Yes MS is trying to make good with it now but IE 11 does not support jscript activex script loading in which adobe flash and adobe dreamweaver both use. Adobe flash and dreamweaver CS2 would be standard in 2008 time frame for websites made at this time. Why is that unprofessional? They worked previously but not anymore with an windows update. IE will get blamed or you if the user is not technical.

Sites are not updated every year contrary to popular belief. This puts more pressure on you if you design pages as some incompatible change in IE 13 comes along and you get the blame.

sinetheo said,

For the record I am not a professional web developer. But I know many who are in my field.


I would hate IE too if I had to put up with that and yes customers SHOULD let you know the specs ahead of time. Many do not. Sometimes your client uses IE 9 and it works and gives you a pat and then some department has IE 6 and freaks out and blame when it doesn't work and expects you to work for free to fix it.

IE has earned much hatred for good reason. No other browser has these problems. Only IE. Yes MS is trying to make good with it now but IE 11 does not support jscript activex script loading in which adobe flash and adobe dreamweaver both use. Adobe flash and dreamweaver CS2 would be standard in 2008 time frame for websites made at this time. Why is that unprofessional? They worked previously but not anymore with an windows update. IE will get blamed or you if the user is not technical.

Sites are not updated every year contrary to popular belief. This puts more pressure on you if you design pages as some incompatible change in IE 13 comes along and you get the blame.


lol.

As a Linux user, I think a lot of lawsuits against Microsoft are nonsense. They are the only provider of "Windows". Windows is their software. They wrote it. It is natural they will ship their own applications with it. They should have the freedom to ship whatever they want with it. If you don't like it, get companies to port applications to other platforms and move away from windows. Costly but the point remains there.
A way to work around the lawsuits against Microsoft's monopoly is to give OEMs more customization over shipped windows. For example, one OEM might opt to remove some component and replace it with something else (assuming that is possible).
Again, I don't use windows and have not touched it in a decade but I have learned from other software environments that we need to respect developers' rights and that includes Microsoft.

What you are saying would make sense if all customers bought their computers from Microsoft. However, customers buy computers, which are made by other companies (Dell, HP, etc) and sold elsewhere (Best Buy, etc). The problem is when they buy these machines, Windows is already installed by default (which they never asked for, but are still forced to pay for).

The point is, Microsoft isn't required to package other browsers with Windows. But because computers come bundled with Windows whether the customer wants it or not, and most customers cannont buy a computer without Windows, they are required to offer the user a choice, and the browser would be the most prominent piece of software most users would use on their computer.

Two problems with that. First, you *can* buy PC's with another operating system, or none at all. (Just doesn't sell well, so yea don't expect everybody to carry them.) And second, you still can install a different browser... *every* OS has a default browser out of the box. Every single one. And yet, somehow, people still manage to pick others besides IE. Even in places that aren't in the EU. But hey, thanks for the "protection".

Hussam Al-tayeb said,
For example, one OEM might opt to remove some component and replace it with something else (assuming that is possible).

Windows in such a state would end up being bloated with OEM garbage replacing built-in apps. That would also give rise to non-standard features or apps that would hardly be interoperable due to lack of control thus leading to fragmentation just like those countless Linux distros. MS is done with the OEM bloatware which used to bog down XP/Vista era machines.

Edited by yowanvista, Apr 13 2014, 10:53pm :

Hussam Al-tayeb said,
A way to work around the lawsuits against Microsoft's monopoly is to give OEMs more customization over shipped windows. For example, one OEM might opt to remove some component and replace it with something else (assuming that is possible).

That's literally what the EC settlement was about. Microsoft was forcing OEMs to ship computers with IE and WMP as default, even though they wanted to offer alternatives browsers and media players. Microsoft was behaving in an anticompetitive manner and abusing its position in the marketplace to the detriment of consumers.

The browser ballot and Windows-N versions were punitive measures to address the damage that had already been done. The EU has no problem with Microsoft bundling its own software with Windows. In fact the EC investigated the default browser restrictions with Windows RT and decided there was no grounds for further investigation.

theyarecomingforyou said,
The browser ballot and Windows-N versions were punitive measures to address the damage that had already been done.

What "damage" exactly? See here's the weird thing. I'm looking at marketshare stats ranging from 2008 (before the ballot) through now... and in both Europe and the US they have pretty much an identical trend. You can pretty much lay one graph on top of the other and see how they're near the same. What exactly did that ballot screen do to "protect" people's choices? Looking at the numbers it didn't seem to do a damned thing, well except move money around anyway. It's not like there was some sort of block in place stopping you from getting any browser or media player you wanted.. *every* OS has a default setup, and it didn't stop you in any way from choosing something else.

recursive said,
What you are saying would make sense if all customers bought their computers from Microsoft. However, customers buy computers, which are made by other companies (Dell, HP, etc) and sold elsewhere (Best Buy, etc). The problem is when they buy these machines, Windows is already installed by default (which they never asked for, but are still forced to pay for).

The point is, Microsoft isn't required to package other browsers with Windows. But because computers come bundled with Windows whether the customer wants it or not, and most customers cannont buy a computer without Windows, they are required to offer the user a choice, and the browser would be the most prominent piece of software most users would use on their computer.

I agree 100%. It's exactly the same with cars. You can't buy a car these days without also having to pay for a bleeding engine.

I remember doing analysis on the statistics at the time and coming to the conclusion that the ballot had no effect whatsoever.

To me, the fact that no one seemed to notice the ballot wasn't appearing on Win7 SP1 indicates that people just didn't care and were not impacted by having Internet Explorer being installed by default.

Max Norris said,
What "damage" exactly? See here's the weird thing. I'm looking at marketshare stats ranging from 2008 (before the ballot) through now... and in both Europe and the US they have pretty much an identical trend.

The damage was to browsers like Firefox and Opera, which were disadvantaged because of Microsoft's anti-competitive actions. As for the browser ballot's efficacy, daily downloads of Firefox decreased by 63% after Microsoft removed the ballot and increased by 150% after Microsoft reintroduced it; it is calculated that between 6 - 9 million downloads of Firefox were lost. Opera downloads doubled after the introduction of the browser ballot.

You're simply misinterpreting the data. The EC revealed that the browser ballot was successful and released the data to prove it.

theyarecomingforyou said,
You're simply misinterpreting the data. The EC revealed that the browser ballot was successful and released the data to prove it.

No, the numbers are pretty clear and it doesn't take a genius to read a graph. Instead of trusting a publicity report (or a random person on a forum), you can look up the numbers yourself, quite easy to find.. the data speaks for itself. What happened with the various browsers gaining/losing marketshare happened everywhere else too, not just the EU. Kind of silly to take credit for something that happened everywhere.

Max Norris said,
No, the numbers are pretty clear and it doesn't take a genius to read a graph. Instead of trusting a publicity report (or a random person on a forum), you can look up the numbers yourself, quite easy to find.. the data speaks for itself.

The data certainly does speak for itself. Firefox lost between 6 - 9 million downloads as a result of the browser ballot being removed. The EC collected data on the impact of the browser ballot and concluded it was effective, while Mozilla and Opera both released figures which confirmed the same thing. Whereas you looked at two graphs, saw they were similar and decided to ignore all other evidence.

Extraordinary claims require extraordinary evidence. I have yet to see you disprove the figures released by Firefox, Opera and the EC, nor give a credible reason as to why all those organisations would fabricate such information. No the browser ballot didn't completely redefine the browser market but it wasn't intended to - it was designed to mitigate the effects of Microsoft's anticompetitive business practices.

theyarecomingforyou said,
Extraordinary claims require extraordinary evidence.

Something wrong with your search engine? Fine, here's one example, you can find others too. Desktop browsers only from 2008-2014, North America and Europe. Take note especially of the values between 2011 and 2012, when this "crime" happened. IE going down, Firefox going down, Chrome going up. Opera swirling around in the bowl. In both areas. If the ballot screen made such a big difference, why is the trend the same in both areas? Again, claiming credit for something that was happening anyway is just inane. Unless of course you're going to say they're lying too.
http://gs.statcounter.com/#des...er-na-monthly-200807-201404
http://gs.statcounter.com/#des...er-eu-monthly-200807-201404

theyarecomingforyou said,
You've ignored what I posted. Correlation is not causation. I'm done here.

And you're ignoring what's right in front of your face... if the ballot made a difference you'd have a wildly different result no matter which way you want to spin it. But since facts are getting in the way, sure, let's wrap it up.

theyarecomingforyou said,
You've ignored what I posted. Correlation is not causation. I'm done here.

I find it quite extraordinary that you can find correlation here at all.

There are far too many factors and events present to clearly identify that there was even any correlation at all between the browser ballot and browser market share.

recursive said,
What you are saying would make sense if all customers bought their computers from Microsoft. However, customers buy computers, which are made by other companies (Dell, HP, etc) and sold elsewhere (Best Buy, etc). The problem is when they buy these machines, Windows is already installed by default (which they never asked for, but are still forced to pay for).

The point is, Microsoft isn't required to package other browsers with Windows. But because computers come bundled with Windows whether the customer wants it or not, and most customers cannont buy a computer without Windows, they are required to offer the user a choice, and the browser would be the most prominent piece of software most users would use on their computer.


what you saying doesn't make sense, when you buy your android tablet it comes with chrome browser. why there is not an option for choosing your browser? let me help you because you need a browser to start using your device. same goes to windows. Microsoft cannot install all browsers for you. then they have to support them.

DonC said,
There are far too many factors and events present to clearly identify that there was even any correlation at all between the browser ballot and browser market share.

Not at all. Mozilla revealed that Firefox downloads dropped by 63% after the removal of the browser ballot and increased by 150% once it was reinstated, while Opera saw downloads increased by 53% across the EU as a result of the browser ballot. That demonstrates it was effective.

The browser ballot didn't completely redefine the browser market but it wasn't intended to. What it did was increase the awareness and number of people downloading other browsers. Don't forget it was Microsoft that proposed the browser ballot in the first place - the company obviously wasn't going to propose something that was going to cripple IE's market share.

theyarecomingforyou said,
Not at all. Mozilla revealed that Firefox downloads dropped by 63% after the removal of the browser ballot and increased by 150% once it was reinstated, while Opera saw downloads increased by 53% across the EU as a result of the browser ballot. That demonstrates it was effective.

Amazing, still going to parrot the same thing even though the numbers show that the general trend was followed in *all* regions, not just the EU. Pretty spiffy ballot that. Besides, it just doesn't add up. For example, if Opera's downloads increased by 53%, wouldn't you expect people would actually be *using* the thing? And yet the marketshare continues to go down, before, during and after this "crime."
theyarecomingforyou said,
What it did was increase the awareness and number of people downloading other browsers.

And again, that happened everywhere. If the browser ballot actually made some sort of difference, you'd see a different trend globally versus the EU, since "clearly" Microsoft was being so anticompetitive.. and yet that didn't happen.

trojan_market said,

what you saying doesn't make sense, when you buy your android tablet it comes with chrome browser. why there is not an option for choosing your browser? let me help you because you need a browser to start using your device. same goes to windows. Microsoft cannot install all browsers for you. then they have to support them.

The difference of course, is that Android doesn't have a monopoly on the tablet market.

recursive said,
The difference of course, is that Android doesn't have a monopoly on the tablet market.

Considering you can buy machines with OSX, Linux or nothing at all, Windows doesn't have one on the PC market either ;)

That's NOT what the lawsuit is about. The lawsuit concerns Microsoft's mismanagement of the situation and incurring a fine that should have been avoided. If Microsoft had complied with the EC ruling it would have had to pay ZERO dollars.

You completed my comment and yes its about how EU and other companies wait for Microsoft to step wrong so they can file a lawsuit. On the other side that was bad management wich costed them a lot, I am surprised it took them this long to take a stand even if that means to drag board members in the halls of justice.

Decebalvs Rex said,
You completed my comment and yes its about how EU and other companies wait for Microsoft to step wrong so they can file a lawsuit.

Microsoft was fined because it was found to have engaged in anti-competitive behaviour and entered into a legally binding settlement with the EC, which it violated. The EC investigates hundreds of companies and most of the time settlements are made to avoid the need for fines, as was the case with the ebook price fixing scandal (involving Apple and several other companies).

Governments don't want companies like Microsoft to break the law, they simply punish them when they do. Your claims have no merit. As I already pointed out, if Microsoft had complied with the ruling it would have had to pay nothing to the EC. Instead Microsoft violated the settlement for 14 months and provided false testimony, for which it was fined. To do otherwise would just encourage companies to flout the law and exploit consumers, as we have seen in the US.

theyarecomingforyou said,

Microsoft was fined because it was found to have engaged in anti-competitive behaviour and entered into a legally binding settlement with the EC, which it violated. The EC investigates hundreds of companies and most of the time settlements are made to avoid the need for fines, as was the case with the ebook price fixing scandal (involving Apple and several other companies).

Governments don't want companies like Microsoft to break the law, they simply punish them when they do. Your claims have no merit. As I already pointed out, if Microsoft had complied with the ruling it would have had to pay nothing to the EC. Instead Microsoft violated the settlement for 14 months and provided false testimony, for which it was fined. To do otherwise would just encourage companies to flout the law and exploit consumers, as we have seen in the US.

This would be the same EU who spent millions of Euros of taxpayer money forcing Microsoft to offer an OEM version of Windows that did not include IE. Interesting to see just how many OEMs availed themselves of that option. Let me count them. Zero, nada, zilch, nil.

This would be the same EU who refuse to reveal the audits of their own accounts. The credibility of the EU and wonks who support them is slightly lower than the abovementioned number of OEMs.

Ptoof!

Decebalvs Rex said,
I understand her, she isn't pleased with EU and other companies milking dollars from Microsoft.

Next comes the ultimate inception!


Micrsoft will get sued by a shareholder for getting sued by shareholder who sued for Microsoft for the mismanagement of the IE of IE ballot agreement.

Major_Plonquer said,
This would be the same EU who spent millions of Euros of taxpayer money forcing Microsoft to offer an OEM version of Windows that did not include IE. Interesting to see just how many OEMs availed themselves of that option. Let me count them. Zero, nada, zilch, nil.

Windows N is for consumers and is available directly on the Microsoft website. OEMs are free to do as they please but plenty of sites sell Windows N, including Ebuyer. You do realise that OEMs doesn't just apply to companies like Dell but to all PC manufacturers, right? I haven't seen any evidence to suggest that not one computer in the whole of EU has been sold with Windows N.

As for the criticism of cost, justice has and will always have a cost - murder trials can costs millions but that doesn't mean we should just abandon them. However, given that the EC fined Microsoft €561m it can't be argued that there was any cost.

PS - The EU's audits have nothing to do with this discussion.