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EU fines Microsoft record $1.3 billion

EU fines Microsoft record $1.3 billion

  • Comments 7

Originally from Yahoo Finance:


BRUSSELS, Belgium - The European Union fined Microsoft Corp. a record $1.3 billion Wednesday for the amount it charges rivals for software information.

EU regulators said the company charged "unreasonable prices" until last October to software developers who wanted to make products compatible with the Windows desktop operating system.

The fine is the largest ever for a single company and brings to just under $2.5 billion the amount the EU has demanded Microsoft pay in a long-running antitrust dispute.


You know, with all the hassle Microsoft has to put up with from the EU over the past few years, sometimes I think that Microsoft should just say "Forget it.  We are no longer going to sell any software in Europe" and then pull out of Europe, entirely.  They could enforce their software not working over there by requiring product registration, checking the geolocation of the IP address and then refusing to issue a product key.


Microsoft's actions have stifled innovation and affected millions of people around the world, EU Competition Commissioner Neelie Kroes said. She called the record 899 million euro fine "a reasonable response to a series of quite unreasonable actions."

...

Microsoft had initially set a royalty rate of 3.87 percent of a licensee's product revenues for patents and demanded that companies looking for communication information — which it said was highly secret — pay 2.98 percent of their products' revenues.

The EU complained last March that the rates were unfair. Under threat of fines, Microsoft two months later reduced the patent rate to 0.7 percent and the information license to 0.5 percent — but only in Europe, leaving the worldwide rates unchanged.


Am I the only one who thinks that Microsoft has the right to charge whatever it wants for its software?  If other companies think that the price is too high then they can select another operating system.  Nobody is forcing them to develop for Microsoft's OS.  Furthermore, if other developers still see value and make a profit even after paying the royalties, then these 3rd parties are delivering value to their end customers.

If customers are willing to pay for Microsoft products and then are subsequently willing to pay for 3rd party products, whose royalties are priced in, then isn't that the end arbiter of value?  That doesn't seem like stifling innovation to me.

Apparently nobody in the EU has read Atlas Shrugged.

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  • I believe there are a few reasons that Microsoft hasn't pulled out of the EU. For one, they are still pulling a huge ROI from those countries, and the longterm of that profit exceeds the 2.5 billion the EU has demanded. The second reason is that businesses and individual users are so use to the Microsoft product family that pulling the product from those businesses and people will cause complete chaos. Not to mention that most of the hacks for any software come from that part of the world. You really wouldn't want to empower a group of people that will cause the downward spiral of your revenue by releasing illegal hacks. Programmers like me and you depend on businesses using our products legally, and plus it gives you a sense of accomplishment and success.

    You're right when you asked if Microsoft should be allowed to charge what they want for their products. Businesses like Microsoft should be able to make their own decisions on how much they'd charge, that's a part of business right? There is one change I'd like to see when it comes the pricing. Every country differs from the next by their economy and the job situation there. Microsoft should invest in economic research in each country to strategically adjust their price models. Using this sort of model would integrate geolocation like you mentioned above for product registration.

  • MS can charge anything for its product. No one is stopping it from doing that.

    But it shouldn’t be charging anything for the information required to build other software that run in the windows environment (even if it were to compete with other software being built by MS).

    Maybe an analogy would make it clear.

    If MS were to build a car (Office, games, etc, in our case) - it could charge what ever it wants for that car - however ridiculous the price maybe.

    But as MS also builds the road the car runs on (the OS in our case), it would be wrong for it to charge whatever it wants - so as to preclude other car manufacturers from running on its roads. This would be especially illegal if the prices charged were to stifle competition to some types of cars - that could potentially directly compete with its own cars.

    Anyways, looks like MS has also figured that the right thing to do is become open as far as .NET is concerned by releasing the code for .NET libraries.

  • I almost agreed with you until you got to the bit about Atlas Shrugged...the handbook for narcissistic sociopaths.

    With the state the world is in now, it really doesn't need any more of Ayn Rand's disciples.

  • You are blaming the "state of the world" on Ayn Rand?

    What are you, a journalist?

  • > If MS were to build a car (Office, games, etc, in our

    > case) - it could charge what ever it wants for that

    > car - however ridiculous the price maybe.

    >

    > But as MS also builds the road the car runs on (the OS

    > in our case), it would be wrong for it to charge

    > whatever it wants - so as to preclude other car

    > manufacturers from running on its roads.

    Raj,

    Are you saying that Microsoft should go to all the trouble and expense of building the road (which is required in order to use cars, both their own and third party) and then give it away afterwards?  

    If it's their road, and letting other cars on the road decreases the profitability of selling their own cars, wouldn't they be better off not letting anyone drive on their road unless you're in a Microsoft car?

  • 'sometimes I think that Microsoft should just say "Forget it.  We are no longer going to sell any software in Europe" and then pull out of Europe, entirely.'

    And please pull out of Japan too.  Microsoft does a lot to make me think the same way you do (sometimes).

    'They could enforce their software not working over there by requiring product registration, checking the geolocation of the IP address and then refusing to issue a product key.'

    That would be excessive for two reasons.  For comparison, if you buy a car in one country and want to drive it in another country, you depend on permission from the second country's government, not from the maker.  The other problem is the geolocation of the IP address, which might be 192.168.99.3, or might not exist, or might exist but not be connected to the internet, etc.

    'If other companies think that the price is too high then they can select another operating system.'

    I wish.  I already had this discussion with one of your colleagues a few years ago.  There are too many vendors who refuse to sell notebook PC hardware without tying monopoly software to it.  Your colleague said that customers choose.  I pointed out that Microsoft has enough power to strongarm hardware vendors into letting customers choose, and asked if Microsoft will do so.  Well it still hasn't happened.

    10 years ago I wanted to choose Windows NT instead of Windows 98, i.e. I wanted to pay Microsoft more, but I couldn't do it.  The only way to get Windows NT Workstation was to pay for both 98 and NT (except on a few limited models of crippled hardware).  In recent years XP has improved enough that, if I buy a PC for other than the kind of uses that MSDN licences allow, I will be content to pay for an XP licence.  Will I be able to get an XP licence instead of a Me2 licence?

    Monopolies don't always cause problems, but some do, and some finally get fined for it.

  • And I really wonder who in the world would be putting

    to use the client-server protocol documentation ...

    I myself blogged about EU today and then came across

    this :)

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