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Microsoft Government Politics

Deadline Looming for Microsoft in Antitrust Case 397

Posted by samzenpus
from the pay-up dept.
gaijincory writes "The International Herald Tribune reminds us that the end of the month is Microsoft's deadline to comply with the European Commission's antitrust ruling. The fine for non-compliance? A cool $5 million per day."
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Deadline Looming for Microsoft in Antitrust Case

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  • And at that rate... (Score:5, Interesting)

    by T(V)oney (736966) on Tuesday May 24, 2005 @01:48AM (#12620839)
    ... they would have a few months to figure out what they wanted to do about it.
    • by MisterLawyer (770687) <{moc.liamg} {ta} {reywalekim}> on Tuesday May 24, 2005 @01:57AM (#12620887)
      Actually, at that rate, Microsoft would still be able to function indefinately. (ceteris paribus, of course)

      Microsoft has an average daily global sales revenue of $100 million. $5 million is about 5% of their global sales. Their profit margins far exceed 5%, therefore they could continue to pay their daily fine to the E.U. and still make a profit every day.

      Also, the E.U. already fined them about $600 million in addition to the prospective daily fine. Thats the same as about four months worth of the daily $5 million fine.

      • by strider44 (650833) on Tuesday May 24, 2005 @03:04AM (#12621138)
        They are a publicly traded company who's shares haven't gone up anytime recently [yahoo.com]. I'd give them a couple of weeks paying that sort of fine before they implode under the weight of shareholders.
        • How many dividends has MS paid out? How many lawsuits does MS find it self in? And how often has shareholders complaigned? Never.

          As to the fine, I suspect that MS will simply make it up elsewhere (rais the prices of Office and Windows .05%) and their bottom line will never reflect it.
          • The majority of MS stock is held by less then 100 people all of whom are closely tied to MS.

            There is no such thing as shareholders complaining, who the hell cares if some grandma is complaining about her 401K.
        • by hey! (33014)
          I don't know.

          How many MS investors believe that they're actually more predatory than Bill and Steve?

          I think the high rolles might be inclined to let the situation ride for a while if they think the MS management is on top of it. Naturally, this is a tricky situation to manage, because Ballmer and Gates can't exactly publicly reassure their investors that they are planning to game the system and make fools out of the regulators. They can't even wink or nod.

          It's like high diplomacy; if they do want to ga
      • by flyingsquid (813711) on Tuesday May 24, 2005 @03:08AM (#12621159)
        Actually, at that rate, Microsoft would still be able to function indefinately. (ceteris paribus, of course) Microsoft has an average daily global sales revenue of $100 million. $5 million is about 5% of their global sales. Their profit margins far exceed 5%, therefore they could continue to pay their daily fine to the E.U. and still make a profit every day.

        The other thing is they could just say, "Due to unforeseen expenses, Microsoft will be increasing the cost of all products sold in the European Union by 50 cents per day."

        Hell, as long as the courts have labelled you a monopoly, you might as well act like it.

      • Until the EU decide that Microsoft are wilfully failing to comply and decide to increase the daily fine. Throwing away 5% of your gross sales isn't something any sensible company does in the long term.
      • by should_be_linear (779431) on Tuesday May 24, 2005 @03:58AM (#12621312)
        Not really. If regulation bodies in EU recognize that MS is happy with 5M/day, commision will be glad to increase it. Don't forget that majority in EU parliament and commision are leftist parties (socialists, greens). It would be political suicide for them to be fooled by mother of all evil (in their mind): Giant American Corporation.
      • by MoonBuggy (611105) on Tuesday May 24, 2005 @06:41AM (#12621784) Journal
        Ignoring stockholder issues that others have mentioned, here's how the fine breaks down:
        MS reported $2,560,000,000 profit last quarter. Spread over 90 days that's $28,444,444.44 profit per day. That means that $5,000,000 per day is about 17.6% of their profit. If the EU provides less than 17.6% of MS's market then it'll be actively costing them money to remain operating in Europe.

        The question then is how much money is it worth to retain worldwide dominance? If they loose Europe, it's a massive crack in their market since the multinational companies will have to be interoperable with non-MS software. MS does have a strong incentive to comply here, AFAICS.
    • Hey its more like they would have years to figure out what they wanted to do if its only a little less than 2 billion a year.
    • Bill will surely fill the fine. By now the guy is very used to paying fines and being sued . In fact he thrives in such an environ and gets free publicity to boot.
      • Re:Bill Will Fill (Score:2, Interesting)

        by R.D.Olivaw (826349)
        The perfect solution would then be to announce that they will use the fines to finance Microsoft competitors (oss?). That would bring MS around quite quickly.
        IT's not going to happen, I know. I am sure it would work well though.
      • by Anonymous Coward
        The joke is on the EU anyway... Bill put a EULA on the check.
      • by ottawanker (597020) on Tuesday May 24, 2005 @03:23AM (#12621200) Homepage
        .. if you consider $5 million a day free, could you please shoot some money my way? thanks.
      • Re:Bill Will Fill (Score:4, Interesting)

        by zerbot (882848) on Tuesday May 24, 2005 @04:33AM (#12621421)
        I dunno. Bill Gates has contested fines and taxes that were levied on him personally. Once he got ticketed for failure to stop at a stop sign, he didn't have proper proof of insurance on him, got cited for that too, and later showed that he did have insurance, just didn't have the card with him. He asked for mitigation of the fine even though it was a piddling amount of money for him.

        Then when he had his house built, he contested the assessment on it because he said that the high cost was largely due to the number of change orders involved in the construction, and did not accurately reflect the true market value of the house. Again, the property taxes were piddly compared to his income.
        • Re:Bill Will Fill (Score:3, Insightful)

          by BJZQ8 (644168)
          If it's one thing I have noticed that is similar amongst all of the super-rich, it is an overwhelming belief that they are being stolen from. It pervades every bit of their thinking and actions. They are well aware of the fact that no human being can work honestly and accumulate billions of dollars; they had to, somehow, convince or mislead others into working to line their pockets. Therefore, they are also well aware that people would love to use THEM in a similar manner.
  • by nacturation (646836) <nacturation.gmail@com> on Tuesday May 24, 2005 @01:49AM (#12620842) Journal
    If Microsoft is making more profit from its business practices than $5M a day, they've shown before that they'll happily pay the fine rather than change practices. Is domination of the European market worth $1.8 billion a year in fines?
    • by eric76 (679787) on Tuesday May 24, 2005 @01:54AM (#12620869)
      Actually, Microsoft has matured into a company that cannot afford to pay such fines for long.

      The hit on Microsoft's bottom line and the failure to meet earnings projections would have adverse effects on its share price.
    • by Kinky Bass Junk (880011) on Tuesday May 24, 2005 @01:54AM (#12620874)
      "Kroes and the 24 other commissioners would then decide whether to impose fines, which could amount to as much as 5 percent of the company's global daily sales, or $5 million, a day."

      5% of global sales? They'd be fine then... not to mention the fact that that is the maximum fine. It's just like getting the maximum fine for graffiti on trains - you never get it.
      • by nickco3 (220146) on Tuesday May 24, 2005 @03:12AM (#12621164)
        It's just like getting the maximum fine for graffiti on trains - you never get it.

        Not even rich and powerful graffiti artists with a history of giving the judge the finger?
        • Especially rich and powerful graffiti artists, as long as they're rich enough to buy whole countries [whoisireland.com].

          And judges tend to be wary of slapping someone too hard when that person pretty much [theregister.co.uk] owns their boss [ffii.org].

          Why do you think Gates and MS are so happy to give the finger so often and so liberally? Because no-one will ever dare to call them out on it - the worst that happens is sanctions against MS that then get argued down on appeal [theregister.co.uk], creatively "misunderstood" [slashdot.org] or just blatantly ignored [64.233.183.104].
    • The fines will increase over time , i imagine the 5 million per day is just a warning anyway .
      I can see that riseing if they refuse to comply .
      Ofcourse if they continue to stand oposed to the law then i am very sure the EU will have no other choice but to enforce the compliance , companys can not be allowed to abuse the law .
      If the EU does nothing it sets a rather dangerous precedent in allowing a company to flaunt the law , If microsoft refuses to comply after one year i can honestly see the EU making move
    • That wouldn't work. You see, the ruling was not:

      "We'll give you a choise between doing this and paying 5 million a day."

      The ruling was instead more along the lines of:

      "You have to do this. To force you, we'll give you a fine of 5 million a day if it ain't done by $date"

      The difference is that the fine is meant to be forcing them into compliance. If they ignored the fine, simply paid up and stayed out of compliance, the court would likely just add a zero on the fine and try again. Repeat as nesseca

    • by erik_norgaard (692400) on Tuesday May 24, 2005 @04:12AM (#12621351) Homepage
      The fine is 5% of their global sales, not EU sales. How much does their activities in EU account for?

      I don't know, but it may make doing business in EU a cost, or a non/low-profit activity whose sole purpose is to maintain the world dominance.

      Staying in EU may then only be motivated by the domino theory: If one country shifts to the "evil" side (that is whatever is oposed to Microsoft) then others will follow.

      The alternative for Microsoft is to pass on the bill to the customers increasing the incensitive to using something more economically viable.
  • They will never pay (Score:2, Interesting)

    by tetrode (32267)
    Or do you think they will ever pay up?

    Don't be redicilous - they will find their way around it. The same as they find their way around not paying taxes, ...

    • by gl4ss (559668)
      there's been cartels punished in the same way regularly in eu(copper, pulp? others?) - with fines going up to same areas. ms will pay when they've exhausted the legal means of countering it.

      btw, ms wouldn't need to pay - eu could just TAKE the money from them. if ms would continue to do nothing it could eventually be barred from operating... who knows, if they gave the finger long enough maybe even exempt them from any copyright protections. would that suck, eh?

      you think ms doesn't pay taxes in eu?
  • I would definitively comply. Not only because I personally do not think I would be able to scrape together the daily penalty in my whole lifetime, but also because that is a significant amount even for a corporation like Microsoft.
  • by Dance_Dance_Karnov (793804) on Tuesday May 24, 2005 @01:53AM (#12620862) Homepage
    from increasing the fine if MS doesn't comply and just pays it out?
  • MicroWing (Score:4, Funny)

    by boisepunk (764513) on Tuesday May 24, 2005 @01:54AM (#12620867)
    Bill: What happen?
    Executive: Somebody set up us the lawsuit.
    Executive: We get subpoena.
    Bill: What !
    Bill: Main screen turn on.
    Bill: It's you!
    Judge: How are you gentlemen!
    Judge: All your $5 million are belong to us.
    Bill: What you say!
    Judge: You have no chance to win the case make your time.
    Judge: HA HA HA HA
    • Man, if only you could make a Zero Wing parody about making a Zero Wing parody! Oh man, I might almost laugh at that.

      It has to include a beowulf cluster of natalie portman's hot grits in soviet russia with old korean men. While BSD is dying in the background. CommanderTaco's penis. Breast. My iPod exploded. I for one welcome our new More cowbell overlords.

      When can we get some new jokes? Some of these are really old, and most of them are just bad.
    • by ggvaidya (747058)
      Bill: Pay them off.
      Executive: Do you know what you doing?
      Bill: Pay 5 millions.
      Bill: For greater profit.
  • they're likely to go a little into the red of this fine, but it'd be stupid to think that they'd just go on for ever. yeah, sure, they make a lot of money, but it's not like they're going to just write it off. And even if they DID; don't you think the EU would try and do something to further encourage them?
  • Way too little (Score:4, Insightful)

    by kernelpanicked (882802) on Tuesday May 24, 2005 @01:54AM (#12620875)
    "If Microsoft's final offer fails to satisfy the regulator, or if the company does not make its submission in time, the commission will write a formal letter to the company, outlining its concerns."

    A formal letter? When did the world officially lose all its balls.

    Unfortunately $5 million a day to Microsoft doesn't really mean much. A real way to get their attention would be to tell them comply or peddle your crap OS elsewhere.
  • Let see... Five million per day divided into a fifty billion piggy bank is how much? That's what Bill Gates for picking up a nickel on the sidewalk. :P
    • That's 1000 days, or about 2.7 years, until the money runs out. And that hurts even Bill Gates a bit more than losing 1000x$0.05 = $50 hurts a normal person.
  • expect to see... (Score:3, Insightful)

    by imess (805488) on Tuesday May 24, 2005 @02:00AM (#12620897)
    7 more reminders on slashdot's frontpage
    • by xiando (770382)
      And they will need it. They did get informed March 2004, so they had More Than A Year already to comply. Perhaps they forgot about it, perhaps $5/day isn't enough to get their attention on it's own?
  • by CaptainCarrot (84625) on Tuesday May 24, 2005 @02:00AM (#12620899)
    Do you take plastic?
  • by jkrise (535370) on Tuesday May 24, 2005 @02:45AM (#12621076) Journal
    would be in the form of free copies of WinXP and Office XP to schools in Europe. And a dinner with Blair while making the announcement, perhaps? -
  • Just don't expect too much from Ms. Neelie Kroes. She has a questionable track record with respect to fair competition. If you speak dutch. [klokkenluideronline.nl]
  • Compliance (Score:4, Insightful)

    by cyberfunk2 (656339) on Tuesday May 24, 2005 @03:20AM (#12621193)
    They'll comply for two reasons.

    First, and foremost, as a previous post said, they simply cant afford a 5 mil $ a day hit to the bottom line. I doubt they make 5 million+ a day in europe, and even if they did, not enough of it would be from their practices that they're being asked to stop.

    Second, and almost equally important is a show of good faith that the EU wants to see from them. If they were to not comply, and/or perhaps refuse to pay the fine (extremely unlikely) that would end up with a lot of powerful people angry at them pretty quickly. My guess is that the US state department would lean on MSFT to cooperate w/ the EU. The U.S. simply cant afford to have one of it's premier companies acting in bad faith, as it would reflect poorly on Americans (whether that should be the case is another argument, but the fact is that many foriegners view America in part through it's major corporations, i.e. MSFT, McDonalds, CocaCola, etc)

    From a buisness perspective, I expect them to have whatever needs to be done done by the deadline, or very close to it.

    On the curiosity side, would someone care to outline exactly what it is the EU is demanding that MSFT do to 'comply'?
    • Clarification: On making 5 mil.$ a day in europe, I meant profit, not gross.
    • Re:Compliance (Score:5, Informative)

      by Raphael (18701) <quinet@nosPaM.gamers.org> on Tuesday May 24, 2005 @05:18AM (#12621542) Homepage Journal
      I doubt they make 5 million+ a day in europe,

      The fine mentioned by the EU is up to 5% of Microsoft's worldwide sales (the absolute maximum according to EU law is 10%). As they currently make about 100 million a day, that translates to about 5 million. I expect that more than 5% of their worldwide sales come from the EU, so they probably make more than 5 million a day in Europe.

      On the curiosity side, would someone care to outline exactly what it is the EU is demanding that MSFT do to 'comply'?

      This is mentioned briefly in the article. Compliance requires basically two things: distribute Windows without the Media Player and document the API or protocols used in some server products so that competitors can create products that can talk to Microsoft's products.

      Personally, I am more interested in the second requirement as it could be beneficial to Linux and free/open source software. I also heard that the EU is not happy with the way Microsoft handled that part (restrictive licensing for the documentation) so there is hope that they will force Microsoft to be more open.

  • by shadowmatter (734276) on Tuesday May 24, 2005 @03:29AM (#12621223)
    Man, if only Bill Gates had a nickel for everytime Windows crashed, he could pay his way out...

    Oh wait, he does.

    - shadowmatter
  • The last time I looked at the figures of Microsoft's *cash* holdings, a few months ago, they were $47 Billion (that's 'Billion' with a 'B', kids). Assuming Microsoft never made another penny profit and simply broke even from here on out, they would have slightly over 25 *years* to pay that fine every day before they ran out of cash.
    • Re:Chump change (Score:3, Informative)

      by Anonymous Coward
      Sigh, no one ever bothers to read the news:

      http://seattlepi.nwsource.com/business/182966_msft buyback21.html [nwsource.com]

      All those years of paying for growth with new shares is coming back to bite Microsoft. Although the insiders look like they will be able to cash out and leave others holding the bag.

      This fine would be major. MS has been cutting a billion or so each quarter over the past year just to meet street numbers and keep the stock from tanking.
  • by Tom (822) on Tuesday May 24, 2005 @03:50AM (#12621286) Homepage Journal
    Funny how a story about EU politics is on a US flag background. :)
  • IHT does not get it (Score:2, Informative)

    by glacote02 (729278)
    The Commission also instructed Microsoft to license confidential Windows code to competitors, allowing them to produce server software that works with Windows Full of shit! The Commission never instructed Microsoft to produce a single line of "code". Juste communication protocols. The IHT is basically refurbishing Microsoft propaganda and spinning an anti-business view of the Commission. sad.
  • IHT (Score:2, Interesting)

    by rathehun (818491)
    What is up with the Herald Tribune website? Increase the text size in Firefox, it looks like crap. Turn off style-sheets to be able to read more easily - BANG - three or four copies of the article.

    Somebody needs to hire a web-designer who wasn't trained on Frontpage.

    Also - a minor point, the $47 billion that MS apparently has, is not cash under the pillow. What it does have is a share value (not sure of terminology) of $47 billion.

    Once shareholders see that shrinking - and believe me, they're watchi

    • Re:IHT--WRONG (Score:4, Informative)

      by stretch0611 (603238) on Tuesday May 24, 2005 @10:23AM (#12623135) Journal
      Also - a minor point, the $47 billion that MS apparently has, is not cash under the pillow. What it does have is a share value (not sure of terminology) of $47 billion.

      Actually you are wrong. I do not know the exact figure but Microsoft does have $40-$50 Billion in cash.

      The term you are looking for is Market Capitalization which is the value of outstanding shares of Microsoft multiplied by the current stock value. Current MSFT has a MarketCap of $278.5 Billion [yahoo.com]. Change in the Market cap is caused by change in M$ stock price. Investors cause the change, not the other way around. i.e. If investors are pleased with MSFT they bid the stock price up which raises the MarketCap; if investors are unhappy with MSFT the stock price goes down lowering the MarketCap.

  • IMHO, Microsoft will comply and stop bundling MS Media Player with Windows in EU because they have nothing to lose from it. I mean, c'mon guys the only way to hit M$ on the desktop is to sell PCs with Linux pre-installed. And M$ blackmails people not to do that (at least here in Greece).

  • by dyfet (154716) on Tuesday May 24, 2005 @07:00AM (#12621831) Homepage
    The EU competition ministry can impose multiple fines, however, I do not think they can ever exceed 5% individually, or 10% collectivily, of world-wide revenues in the effected products. And of course, they can be subject to delay, and reduction to perhaps meaningless levels on appeal. Some have also suggested that as this is less than the unusual profit margins in the monopoly products, and so even that may have no direct impact on Microsoft's behavior (Microsoft could simply raise prices for example).

    However, the treaty of Rome and subsequent enabling treaties which empower the EU compeitition ministry to do this also gives them one other important power which they have so far not used; the right to set aside and void contracts. This was originally intended to set asside member state and commercial contracts which were created under unfair bids, but I don't recall seeing anything in the treaty language nessisarly limiting it's action in this regard other than past uses. What if the EU competition ministry really grew a set, and choose instead to try and void the Microsoft EULA within the European Union as an instrument of unfair bargaining by an illegal monopoly? It may just actually have the authority to do this. Certainly it does have the clear authority, which it has used before, to explicitly cancel existing government and private contracts, though would normally do so individually rather than wholesale. Certainly if they even tried to do this, whether attacking large individual contracts, or, wholesale liberation of their consumers, it would be a much more effective action against Microsoft's monoply business practices than any piddly fine...

  • by ClosedSource (238333) on Tuesday May 24, 2005 @11:40AM (#12623938)
    It sounds like the EU is saying:

    "We don't know exactly what we want you to do, so make proposals until we tell you one is adequate. By the way, if you don't come up with a proposal we like by the deadline, we're going to fine you."

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