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European Commission fines Microsoft, warns others

In an unprecedented move Wednesday, the European Commission fined Microsoft Corp for failing to follow through on a commitment it made to give customers a clear choice of web browser. The fine of 561 million euros ($731 million) represents 1 percent of Microsoft's annual sales. 

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"The implications for companies going forward is that they must be more rigorous in complying with any agreement with the Commission, which does not take prisoners for infractions,"he said.   

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"Companies face severe sanctions for flouting EU rules, even accidentally."   

Wednesday's fine brings the total of EU fines issued againstMicrosoft over the past decade to more than 2.2 billion euros,making it the world's worst offender of EU rules.   

While the charge could have been higher, it still marks afirm sanction and will be noted by the likes of Google,which is involved in a dispute with the Commission over how itranks search engine results.   

Google is under pressure to offer concessions to prevent theCommission moving to the next stage in the case, which couldinvolve fines. Other major technology companies such as SamsungElectronics are also under investigation.   

Wednesday's decision is expected to help Microsoft draw aline under its troubles in Europe as it gears up for anintensified battle against Google. Microsoft is one of the complainants in the EU's investigation into the search giant.   

Almunia has also signaled EU regulators' concern overantitrust issues in the links between technology platform ownersand application developers, in a move that could spell troublefor Apple Inc and Google, whose iPads and Android tablets are leading the growth of the computer market.    

Relations between the EU's antitrust body and Microsoft have frequently been tense. In 2004, the Commission found that thecompany had abused its dominant market position by tying WindowsMedia Player to the Windows software package.   

In 2009, in order to resolve other competition concerns, Microsoft undertook to offer users a browser choice screenallowing them to download a browser other than Explorer.   

The Commission made that obligation legally binding for fiveyears, until 2014, and initially the company complied. FromMarch 2010 until November 2010, 84 million browsers weredownloaded via the screen, the Commission said.    

But the Windows 7 service pack 1 rolled out between mid-2011 and mid-2012 failed to offer the choice, leading to theinvestigation that resulted in Wednesday's fine.   

In calculating the fine, the Commission said it had takeninto account that Microsoft had cooperated by providinginformation that had helped speed up the investigation.   

Analysts always found it odd that Microsoft would havepurposefully failed to offer a choice of browsers via itssoftware given that the potential fine for such a failure wouldfar exceed any potential income from not offering it.   

Microsoft's share of the European browser market has morethan halved since 2008 to 24 percent. Google's Chrome has a 35percent share, followed by Mozilla's Firefox with 29 percent,according to Web traffic analysis company StatCounter.    

Given Microsoft's fading power in the browser market, somequestioned the size and point of the fine.   

"As always, the regulators are late to the party," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. "How did the EU come up with that figure in damages? There are no restrictions as to being able to place anew browser on the PC and it's really kind of clear that Microsoft isn't benefiting monetarily from the browser at this point."

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