PARIS The European Commission ordered Microsoft Corp. on Wednesday (March 24) to take immediate steps to stop violating European Union antitrust law while imposing a record $611.8 million fine on the U.S. software company.
The Commission's five-year probe found that Microsoft broke the law by leveraging its "near monopoly" in the PC operating system market to gain advantage in markets for work-group server operating systems and for media players.
Because "the illegal behavior is still ongoing," the Commission said it is requiring Microsoft to unbundle its Windows Media Player from its operating system within 90 days. It was also ordered to disclose "complete and accurate" interface information to rival makers of computer servers within 120 days.
"Dominant companies have a special responsibility to ensure that the way they do business doesn't prevent competition on the merits and does not harm consumers and innovation," European Competition Commissioner Mario Monti said in a statement. "Today's decision restores the conditions for fair competition in the markets concerned and establish clear principles for the future conduct of a company with such a strong dominant position," he added.
The Commission noted that the illegal conduct has enabled Microsoft to acquire a dominant position in the work-group server operating system market, and risks eliminating competition altogether in the server market. Further, the Commission ruled that Microsoft's conduct has "significantly weakened competition on the media player market." According to the Commission, "The ongoing abuses act as a brake on innovation and harm the competitive process and consumers, who ultimately end up with less choice and facing higher prices."
The Commission will create a "monitoring trustee" to ensure that Microsoft's disclosures to rivals are "complete and accurate, and the two versions of Windows are equivalent in terms of performance."
Microsoft CEO Steve Ballmer said in a statement, "We respect the Commission's authority, but we believe that our settlement offer from last week would have offered far more choices and benefits to consumers."
During months of discussion and settlement negotiations leading up to today's decision, Microsoft claimed it offered wide-ranging proposals. For example, under the Microsoft's proposed settlement, "any personal computer sold with the Windows operating system also would have carried three non-Microsoft media players, leading to the distribution of more than 1 billion competing media players over the next three years," according to Microsoft.
Settlement talks broke down last week, largely because both parties could not agree on commitments for Microsoft's future conduct.
Microsoft said it would appeal the EC decision. That could delay payment of the fines for several years, observers said.