Microsoft's Fine Is $612 Million
Updated from 7:22 a.m. EST
Microsoft (MSFT) was hit with a $612 million fine and ordered to come up with a version of Windows that doesn't include its media player under a penalty imposed Wednesday in Europe for monopolist trade practices. The Redmond, Wash., company must also release programming code that will allow Windows computers to run better with other companies' servers.
The ruling was immediately hailed by two of the software maker's biggest rivals: Sun Microsystems (SUNW), which believes Microsoft has horded source code to keep other players out of the server market; and RealNetworks (RNWK), which thinks the bundling of Microsoft's media player with Windows threatens to marginalize its own sound and video software.
"By requiring Microsoft to make disclosures that will allow other servers to comparably interoperate with Microsoft desktops and servers, the commission's decision seeks to create a level playing field in the work group server market place, enabling competitors to deliver work group servers that can fully interoperate and therefore compete on the merits," Sun said in a statement.
"This decision is fundamentally significant because the European Commission has formally declared that Microsoft's media player bundling strategy is illegal and has established the guideposts for future bundling cases," RealNetworks said, noting it was the first legal review of Microsoft's media player bundling practice. "While we have not yet seen the complete decision, we support the European Commission's efforts to provide European consumers with all the benefits of a competitive marketplace, including choice in digital media products," the company said.Microsoft's shares were down a penny to $24.14 in early premarket trading on Instinet. The European Union announced the actions after talks toward a settlement broke down last week. Microsoft is expected to appeal the ruling and could delay its imposition for months and possibly years. The fine may be a record for European Union but it is negligible to Microsoft, coming to less than 10% of its annual European revenue and barely denting its balance sheet cash, which totals more than $50 billion. Of greater interest to Microsoft shareholders, who have seen the stock grind about $1 lower over the last 12 months during a 50% run-up in the Nasdaq, is any precedent in which Windows is modified to diminish the company's competitive advantages.
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