Ethics Newsline®

BRUSSELS
The European Union last week hit Microsoft Corp. with a $613 million fine, ordering the company to change the way it does business and sell a stripped-down version of its Windows operating system.

The sweeping penalties follow allegations that Microsoft, whose software runs more than 90 percent of the world’s personal computers, uses its market dominance to quash competition and innovation.

The EU ruling comes six years after Sun Microsystems accused Microsoft of withholding vital information about its code, keeping Sun and others from building server software that would run smoothly on Windows PCs.

Over the years, EU investigators switched their focus from servers to media players, which enable PCs to play music and video files, reported the Washington Post.

Last week, the European Commission concluded that Microsoft used its market dominance in one area — operating systems — to achieve dominance in another by bundling its Media Player with Windows.

As punishment, the EU ordered Microsoft to pay a $613 million fine and release two versions of Windows for Europe — one with Media Player, the other without — within 90 days. Microsoft also must divulge details about its code to competitors within 120 days, reported the New York Times.

“Dominant companies have a special responsibility to ensure that the way they do business doesn’t prevent competition,” said EU antitrust head Mario Monti, reported the Associated Press.

“We are simply ensuring that anyone who develops new software has a fair opportunity to compete in the marketplace,” Monti said. “Our decision is about protecting consumer choice and stimulating innovation.”

Microsoft last week denounced the EU ruling as “unwarranted and ill-considered,” arguing that the EU ruling actually would hurt consumers and creativity by giving rivals less incentive to chase the leader, reported the Post.

Microsoft noted that EU regulators rejected several settlement proposals, including an offer to install three competing media players on Windows PCs — a move the company said would have been more to consumers’ benefit.

“The European Commission has the first word, but the European courts have the final word,” Microsoft general counsel Brad Smith said last week, vowing an appeal of the ruling.