Microsoft likely to face 'significant' fine in EC antitrust clampdown

Microsoft is likely to face “significant” antitrust fines as the European Commission looks to clamp down on monopoly in the tech industry.

Microsoft recently admitted that it had breached the terms of its antitrust commitment signed in 2009 which saw all Windows operating systems get an alternative to Internet Explorer. The agreement was made after lengthy investigations by the EC dating back to the late 90s.

Microsoft cited a technical glitch for allowing millions of Windows 7 systems to reach customers without the browser choice screen (BCS) that gave options for the likes of Google’s Chrome and Firefox, in addition to Microsoft’s own Internet Explorer.

Alan Davis, senior competition partner at Pinsent Masons, said that the EC is likely to come down strongly on Microsoft regardless of whether the technical glitch is at fault or not, with the Redmond firm facing some difficult questions.

Davis believes that the European Commission will be unsympathetic because they will wonder why such an enormous company – with almost infinite resources – was not monitoring the data more carefully.

They will ask why Microsoft wasn’t making sure  there weren’t any technical glitches, why they leave them so late, and why it takes people to complain to the Commission before the company could acknowledge an error.

The Commission, according to Davis, will be “inherently suspicious of whether or not Microsoft is telling the truth” and will be putting officials under a lot of pressure to explain exactly what they have done in terms of monitoring the situation.  

As the EC has been hot on the heels of Microsoft for over a decade, presenting a convincing argument could be an uphill struggle for the company – particularly as it made commitments to Europe three years ago that got it out of having to face any financial punishments.

Davis thinks that the investigations could even go as far as checking internal communications – to make sure shipping Windows without BCS wasn’t a deliberate move – though he says this “probably unlikely”.  

What is more likely is that Microsoft will be hit by a fine, with the Commission able to hit firms for up to 10 percent of their turnover, a sizeable fee for Microsoft.  Though the EC has never implemented such a punishment to the full effect of its powers, Davis thinks that given the seriousness of the case, and Microsoft’s past misdemeanours, the amount could still be a blow.

“It still could be a very very large amount of money,” he said. “Microsoft has been fined in the past for hundreds of millions of euros, so it is possible that the fines could be very significant.”

Microsoft itself has offered to extend the conditions of its commitment by 15 months  to placate the EC, but Davis says that with the commitment framework being relatively new, the Commission will be seeking to send out a strong message that it means business.

“What they will want to do is to send out a very strong message to other companies who have agreed similar types of cases,” he said, “and to those entering into these commitment decisions in the future, that ‘if you do what Microsoft did then we will come down on you like a tonne of bricks’.”

Although Davis points out that the EC antitrust investigations Google is currently undergoing are of a slightly different nature, the EC will be showing that it will not stand for any foul play.

“It is inevitable, subject to the facts stacking up,” Davis said, “that the commission will want to try and impose a significant fine for the purposes of ensuring that there is that declarence message being put out.”

The Commission has repeatedly said that it is very interested in the tech sector and that they are going to be “scrutinising dominance issues”.

They are “gunning for Google” at the moment, and while the cases are different they are both about the “super dominance” of companies in the tech sector.