Was Microsoft's EU fine too much? One economics professor says, "Yes"

On Wednesday, the European Union's antitrust regulators in the European Commission fined Microsoft 561 million euros, or $732 million, due to Microsoft's violations of a 2009 anti-trust agreement with the EU. Microsoft admitted that a number of Windows 7-based PCs did not display the required web browser download ballot in Europe from 2011 to 2012, as required by the agreement with the EU. Microsoft said it was a software mistake and fixed it once it was discovered.

In their decision on Wednesday, the EU said, "A failure to comply is a very serious infringement that must be sanctioned accordingly." But was the amount of the fine too much for what was apparently an unintentional error on Microsoft's part? Nicholas Economides, a professor at New York University's Stern School of Business. seems to think so.

Investors.com quotes Economides as saying, "This fine is extraordinary. It's huge, for something that for all intents and purposes looks like a mistake." He added that while Microsoft's technical issues could have been avoided, he said, " ... to charge them more than $700 million on a technical glitch sounds excessive to me."

Microsoft has also been cooperative with the EU on this manner and Economides believes that the EU is distracted with punishing Microsoft when they should go after Google. The EU has its own anti-trust investigation going into Google's search policies and Economides says Google has been "defiant" in terms of their cooperation with the EU's questions.

Source: Investors.com | Image via Microsoft

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Such an insightful analysis by the revered professor !

Anyhow, the fine is a little over 1% of yearly revenue. 'Too much' is relative.

Mistake or not, a patch tuesday/ out-of-cycle update would have solved the issue.

Its funny that banks which messed with libor at a catastrophic level to the economy got fined £400m each. Yet this browser anti-trust settlement keeps going on for a decade at this price. If they also ban porn on Wednesday, I will become an asylum seeker to the US or Canada. Microsoft should say: I am not selling or supporting windows to EMEA and see the businesses go after the EU and their stupid Nazi way of thinking. *Spit

Riva said,
Microsoft should say: I am not selling or supporting windows to EMEA and see the businesses go after the EU and their stupid Nazi way of thinking. *Spit

If Microsoft doesn't want the revenue it currently gets - the EU alone already has more potential customers than the US - it maybe should do that...

On the Nazi thing: it's nice that you have no idea what you're talking about...

MFH said,

[...] nice that you have no idea what you're talking about...

Or not even an understanding of the acronym EMEA. LOL.

Normally I'd say they "forgot" the browser ballot on purpose but this time I think it was a mistake. Why? Because absolutely no one would have missed it and complained saying they needed it.
I'm fed up of having my IE icons stolen off me by it in return for being offered to install KMeleon. It's not about Choice at all. Anyone can choose to go and download Firefox or Chrome if they want to. A nicer choice would be not having Chrome bundled as FOISTWARE with nearly everything nowadays.

A simple mistake? Highly unlikely. However, it makes no different whether it was or not. Incompetence and ignorance are no defence in the eyes of the law. Microsoft know damn well that the EU would fine them again if they broke the agreement over this ballot thing, but they tried it on anyway.

"Incompetence and ignorance are no defence in the eyes of the law"

Yes they are, they change the crime in many instances. Compare premeditated murder, murder, manslaughter, negligent manslaughter, etc.

If the EU is so desperate for money and if they really wanna help people out why can't they sue the **** out of monsanto then...? they cause way more harm then not having the stupid browser ballot crap...

and inb4 the members that would make up reasons for apologizing for the EU killing thier dogs.... YOU NEED NOT REPLY.

Who even care about that ballot screen?.....
Most of the people know the Google Chrome exist without Microsoft telling them. If there are people who don't know, most likely they does not know how to use computer well and most likely they would not use the ballot screen and just continue use IE...

Their operating system .... Their defaults! To me it's very acceptable if an OS comes with its default and as a user I should be able to install/change to the browser and the search engine of my choice & if not its MY fault/choice not that of the parent company.

what I'm most concerned about is the probability that the E.U. knew almost immediately that the violation took place but they let it go for a year as an excuse to jack up the fine.

seta-san said,
what I'm most concerned about is the probability that the E.U. knew almost immediately that the violation took place but they let it go for a year as an excuse to jack up the fine.

It could also have been intentional to give MS time to notice and fix their mistake. When the "mistake" turned into an actual omission, the fine came along.

It's not like the EU is supposed to be Microsoft's nanny. Microsoft has a minor army of legal advisors and this is their job.

Google should be the one getting all these fines today not Microsoft, Google are being let free to do whatever they want in Europe and North America, time for them to start being held accountable for the crap they do.

pmdci said,
Did it happened without warning? No. Can't do the time, don't do the crime.

Fine, but they should prove malicious intent to justify a fine that large.

You mean like doing something the courts have repeatedly told them to do...

I can see a software glitch, but it's not like it happened on one machine. That's a software glitch.

rfirth said,
Fine, but they should prove malicious intent to justify a fine that large.

Why? Microsoft was required to ensure its own compliance, which is failed to do. It then gave false testimony to the EC when it claimed it was fully compliant. Just because it wasn't deliberate does not mean it wasn't worthy of punishment.

theyarecomingforyou said,

Why? Microsoft was required to ensure its own compliance, which is failed to do. It then gave false testimony to the EC when it claimed it was fully compliant. Just because it wasn't deliberate does not mean it wasn't worthy of punishment.

EXACTLY. Couldn't say it better myself. MSFT had it coming for not taking it seriously enough the first time.

TomJones said,

The punishment should fit the crime.


See, this reasoning doesn't make any sense. It has already been decided what the punishment should be if this would happen in the future. You may complain about the original court case that's several years old by now, but there is no confusion about what the penalties should be now.

Microsoft didn't whine about it because they knew what they had coming. It's journalled on paper and clubbed in court. What Mr Ballmer may be angry about is the team that made this oversight and I wouldn't be surprised if some people had to leave the company, or had a very uncomfortable... talk with him.

It's also not up to the EU to prove that this was an oversight and not malicious. It doesn't work like that when you have a previous court order shoved up your ass. By then, you are supposed to be particularly cautious to follow what's in the freaking document.

All this is really laughable. It's such a minor software effort with a huge penalty backing it if it's not implemented that I just can't understand how Microsoft missed it, if they indeed just forgot about it. Microsoft and their army of lawyers.

Clearly this was an abusive move by the EU. As Microsoft are an American company I'm thinking the US government should fine the EU $14Tn USD.

Sounds like a proportional sum by EU logic.

Athernar said,
Clearly this was an abusive move by the EU. As Microsoft are an American company I'm thinking the US government should fine the EU $14Tn USD.

Sounds like a proportional sum by EU logic.

Let's hope for your sake that nobody gets fined for talking out of his a**.

pmdci said,

Let's hope for your sake that nobody gets fined for talking out of his a**.

Being this angry on the internet isn't good for your health. You should do something about that before your heart gives you a lifespan fine.

Athernar said,
Clearly this was an abusive move by the EU. As Microsoft are an American company I'm thinking the US government should fine the EU $14Tn USD.

Sounds like a proportional sum by EU logic.


EU WILL FINE MS SOMEDAY ENOUGH TO BUILD A DEATH STAR

Athernar said,

Being this angry on the internet isn't good for your health. You should do something about that before your heart gives you a lifespan fine.

+1 nothing personal, buddy

Athernar said,
Clearly this was an abusive move by the EU. As Microsoft are an American company I'm thinking the US government should fine the EU $14Tn USD.

Sounds like a proportional sum by EU logic.


It's not abusive. Microsoft has admitted it was an oversight and fixed it, although it was too late and everyone knew it. It was a goof-up by Microsoft that got very exepensive and I wouldn't be surprised if some people on Microsoft has been fired as a consequence.

What you CAN complain about is the original decision to force this ballot on Microsoft, but that's a discussion that is years old by now and in my opinion very tiring. It was decided in an age when IE was far more dominating than today, so comparisons and conclusions you draw from today's browser landscape are invalid.

Edited by Northgrove, Mar 10 2013, 1:11pm :

Northgrove said,

It's not abusive. Microsoft has admitted it was an oversight and fixed it, although it was too late and everyone knew it. It was a goof-up...

Yes, it was a goof up, quite.

Generally in law, the severity of a punishment is adjusted according to intent - and considering it was MSFT who chose to implement the ballot in the first place, the fine is grossly disproportionate.

Par for the course in anti-corporate pro-government Europe though I guess.

Athernar said,

Yes, it was a goof up, quite.

Generally in law, the severity of a punishment is adjusted according to intent - and considering it was MSFT who chose to implement the ballot in the first place, the fine is grossly disproportionate.

Par for the course in anti-corporate pro-government Europe though I guess.

They didn't propose it as a gesture of goodwill. They propose it as a way to settle the matter. And they failed to deliver it. Hence the fine.

Again, MSFT got it coming. They were quite aware of the consequences of failing to deliver.

pmdci said,

They didn't propose it as a gesture of goodwill. They propose it as a way to settle the matter. And they failed to deliver it. Hence the fine.

Again, MSFT got it coming. They were quite aware of the consequences of failing to deliver.

What "matter"? The sellouts over at Opera bitched a little and the EC then later said "We're looking into it". MSFT chose to pre-empt any potential "matter" by proposing the ballot.

I have no fondness for Microsoft, but to say they "got it coming" is frankly juvenile. That or the EU apologists have developed a fondness for the Sharia school of thought recently.

Athernar said,

What "matter"? The sellouts over at Opera bitched a little and the EC then later said "We're looking into it". MSFT chose to pre-empt any potential "matter" by proposing the ballot.

I have no fondness for Microsoft, but to say they "got it coming" is frankly juvenile. That or the EU apologists have developed a fondness for the Sharia school of thought recently.

If anything here is juvenile is your sad wise-a** comments about the EU. Grow up.

Whilst I agree it was WAY too much, 'a professor at New York University's'... Sorry but why get someone that not only isn't from europe but probably knows very little about europe to comment?
Might as well get obama to comment on what it's like living in Ecuador.

n_K said,
Sorry but why get someone that not only isn't from europe but probably knows very little about europe to comment?

A quick search shows that he's (among other things) an advisor to a couple of European governments and banks, the FTC, major financial exchanges and such. He's probably qualified to comment on this.

I've just looked and all I can find with his name and europe is him commenting on greece and the euro banking crisis, and some comments he's made on india. Where did you read that he's an advisor for european stuff?

so?
just because he doesn't have a job in europe doesn't means he isn't qualified.
it doesn't mean one can't study things about another country and their policies just because they don't live there.

n_K said,
Whilst I agree it was WAY too much, 'a professor at New York University's'... Sorry but why get someone that not only isn't from europe but probably knows very little about europe to comment?
Might as well get obama to comment on what it's like living in Ecuador.

So according to you, non-Europeans are prohibited from commenting on matters relating to the EU?

Tuishimi said,
Riiiight... meanwhile every European on Neowin lamb bastes the US on every possible topic that comes up...

lol lamb baste... Lambast is one word, lamb baste would be basting your lamb!

n_K said,
Whilst I agree it was WAY too much, 'a professor at New York University's'... Sorry but why get someone that not only isn't from europe but probably knows very little about europe to comment?
Might as well get obama to comment on what it's like living in Ecuador.

I'm trying to imagine a world where Europeans swallowed their own opinions about America.

Nope, can't get the picture to form.

Joshie said,

I'm trying to imagine a world where Europeans swallowed their own opinions about America.

Nope, can't get the picture to form.


There's a big difference between someone on a forum bashing america or the EU compared to some bigot that has it published as 'factual' just because of his status. I don't give a **** about what obama thinks of the UK, recently he said the UK should stay in the EU because it helps the US -> **** obama and what the UK does for the US by staying in europe, it's got NOTHING to do with him and should have been completely ignored just like this bigot that said this crap.

Well, that was a well worded retort, and completely on topic. /s

The professor's statement was a statement of opinion, not fact. And it's nice that just because someone disagrees with you they are a bigot. You should learn what words mean.

n_K said,

There's a big difference between someone on a forum bashing america or the EU compared to some bigot that has it published as 'factual' just because of his status. I don't give a **** about what obama thinks of the UK, recently he said the UK should stay in the EU because it helps the US -> **** obama and what the UK does for the US by staying in europe, it's got NOTHING to do with him and should have been completely ignored just like this bigot that said this crap.

Look, n_k, I realize you're determined to have your own opinion, and it's great that you only need 1% of the available data to come to conclusions you're willing to stubbornly and passionately defend, but when 30 seconds of research shows me that every single one of your assumptions is dead wrong, maybe it's time for you to re-evaluate how you, well, evaluate the world around you.

Googling this professor's name gives you first page results describing his credentials, which you're so eager to xenophobically question, and while I'm no schadenfreude addict, I could recommend a few good lotions to soothe the butthurt you'll be dealing with after learning this guy received a big chunk of his education in--wait for it--that's right--you [opposite of] guessed it--ladies and gentlemen--

London.

Source--because I don't just make crap up for the joy of hearing my own opinions:

http://www.stern.nyu.edu/faculty/bio/nicholas-economides

It was definitely too much... they shouldn't even charged it at all to be honest unless they do the same to Google and Apple who do the exact same thing, if not worse.

Also, they get charged $732 million for a stupid ballot on their OWN software, yet Google gets charged only $7 million for intruding on people's private properties and recording people's Wifi's... being a major privacy threat. Which is what Microsoft is fighting for (protecting people's privacy), even if they choose to stay with Google.

As usual, it's always the good guys that take the hits.

j2006 said,
It was definitely too much... they shouldn't even charged it at all to be honest unless they do the same to Google and Apple who do the exact same thing, if not worse.

Also, they get charged $732 million for a stupid ballot on their OWN software, yet Google gets charged only $7 million for intruding on people's private properties and recording people's Wifi's... being a major privacy threat. Which is what Microsoft is fighting for (protecting people's privacy), even if they choose to stay with Google.

As usual, it's always the good guys that take the hits.

oh no, its different MS is a evil monopoly... Apple and Google are perfect little angels

neufuse said,

oh no, its different MS is a evil monopoly... Apple and Google are perfect little angels

No corporation is a little angel... but at least they do a LOT more good than the other 2, with many citizenship efforts, free support and services for non-profits, supporting start ups, and fighting for user's privacy rights getting people to petition against Google's evil antics.

If the EU wants to target MS, then they should be targeting Google and Apple for the same things. Simple as that. This isn't the 90s anymore.

j2006 said,

fighting for user's privacy rights getting people to petition against Google's evil antics.

Microsoft only care's about its revenue which Google is cutting in to. Anything that makes Google look bad is a plus to Microsoft, that's why they "fight for user privacy".

j2006 said,
It was definitely too much... they shouldn't even charged it at all to be honest unless they do the same to Google and Apple who do the exact same thing, if not worse.

Also, they get charged $732 million for a stupid ballot on their OWN software, yet Google gets charged only $7 million for intruding on people's private properties and recording people's Wifi's... being a major privacy threat. Which is what Microsoft is fighting for (protecting people's privacy), even if they choose to stay with Google.

As usual, it's always the good guys that take the hits.

What annoys me more is the EU's lack of demonstrating malicious intent vs. a genuine error that was promptly corrected. I'm no fan boy but all evidence shows that what Microsoft did was a genuine error where as Google deliberately went out of its way to violate peoples privacy which his a lot more serious.

exotoxic said,

Microsoft only care's about its revenue which Google is cutting in to. Anything that makes Google look bad is a plus to Microsoft, that's why they "fight for user privacy".


Who cares? They are fighting for you, be thankful.

j2006 said,
It was definitely too much... they shouldn't even charged it at all to be honest unless they do the same to Google and Apple who do the exact same thing, if not worse.

Also, they get charged $732 million for a stupid ballot on their OWN software, yet Google gets charged only $7 million for intruding on people's private properties and recording people's Wifi's... being a major privacy threat. Which is what Microsoft is fighting for (protecting people's privacy), even if they choose to stay with Google.

As usual, it's always the good guys that take the hits.

Lol what? This happened in 2 different places. One happened in the EU and Google got fined in the USA. God knows what Europe would do for cash right now.

j2006 said,

No corporation is a little angel... but at least they do a LOT more good than the other 2, with many citizenship efforts, free support and services for non-profits, supporting start ups, and fighting for user's privacy rights getting people to petition against Google's evil antics.

If the EU wants to target MS, then they should be targeting Google and Apple for the same things. Simple as that. This isn't the 90s anymore.


Every year there is google summer of code. Open source project which have nothing to do with Google get money for student projects. See Blender 3d.
The difference with windows and iOS and Android is that windows has a monopoly on the desktop market. They also pressured OEMS to not install competing browser's. Which is monopoly abuse.
Android make it allot easier than iOS to use another browser. First they can use their own render software and JavaScript engine without being gimped. On iOS you can't have accelerated JavaScript or render software. If anything they should target apple more than android.

MFH said,
I find it hard to believe that it's so hard for Americans to understand why Microsoft has been fined...

They need more bailout money to stop Greece from collapsing?

echostorm said,

They need more bailout money to stop Greece from collapsing?


Classical thing an American would say, thank you /s.

exotoxic said,

Microsoft only care's about its revenue which Google is cutting in to. Anything that makes Google look bad is a plus to Microsoft, that's why they "fight for user privacy".

Not true, Microsoft has a long history of enforcing privacy of it's customers, however this was born from a business requirement of working with large enterprises and government. So the only similarity here is that it is business strategy. In reality no large organization is an "angel". Since there are always too many layers between the intent and the action. However my observations show that Microsoft is probably one of the most ethical large organizations on this selfish little planet!