European Union regulators have fined Microsoft Corporation (NASDAQ:MSFT) €561 million ($732.2 million) for breaking its promise to offer European users of Windows operating system the choice of rival browsers.
The European Commission said the Redmond, Washington-based software giant was the first company to breach a voluntary agreement with the regulators. That prohibited about 15 million Windows OS users to pick alternative browsers to its Internet Explorer.
The latest penalty is a new chapter in the decade-long fight between Microsoft Corporation (NASDAQ:MSFT) and EU authorities. Earlier, Microsoft was fined €1.6 billion for not providing information to rivals at fair prices, and for tying its Windows media player with the operating system.
However, it's Intel Corporation (NASDAQ:INTC) that suffered the largest fine by European authorities. The chip maker was asked to pay $1.4 billion or €1.1 billion for abusing its dominance in the chip market in 2009.
The European Union competition chief Joaquín Almunia that this noncompliance fine is an example to other firms that might breach similar agreements in the future. Mr. Almunia said in Brussels that now companies will think twice before internationally breaching their agreements or neglecting their duty.
Taking full responsibility for the blunder, Microsoft said it was a "technical error," and the company will make internal controls more strict to avoid such errors. The penalty amounts to about 1 percent of the company's annual sales. Mr. Almunia said the fine could have been much higher had the company not cooperated with the regulators. The authorities also considered duration and gravity of the infringement while setting the sum.
In 2009, Microsoft Corporation (NASDAQ:MSFT) signed a deal with the European Commission to address concerns over the way Internet Explorer was tied to its Windows operating system for personal computers. At the time, Internet Explorer had 90 percent of the market share in the region. But Microsoft promised in the agreement to provide users a "choice screen" that will allow them to switch to other Web browsers till 2014.
Initially, Microsoft honored the agreement, but later the regulators began to receive third party complaints. Then the European Commission noticed that Microsoft had removed the choice from February 2011 until July 2012. The issue clearly shows how European authorities monitor compliance in such matters.
Microsoft Corporation (NASDAQ:MSFT) shares fell 1.64 percent to $27.89 at 9:57 AM EST today.