The European Union stepped up to level the biggest single fine against a company when it slapped Microsoft with a $1.35 billion penalty for anti-trust and anti-competitive behavior, and for not complying with earlier rulings to curb these kinds of practices.
It's the latest salvo fired by the EU as it tries to come up with a way to rein in Microsoft's predatory behavior in an ongoing case that dates back years. All of this stems from Microsoft's failure to come up with what the EU says is "reasonable" royalty rates it charges competitors so they can license the technology they need to develop new products that would be compatible with Microsoft's Windows. In other words, the EU charges that Microsoft created a monopoly on the desktop by owning the operating system, and then charges exorbitant fees to software developers looking to create programs that will work with Microsoft's products.
It's an old saw, to be sure, and while the fine will generate big headlines by its sheer size, it is merely the latest in a very long list of patent and ant-trust settlements and fines from the world's biggest software maker. First, it was the $750 million Microsoft paid then-AOL/Time-Warner in 2003, stemming from Microsoft's push onto the internet and its destruction of Netscape. Then, a year later, $536 million to Novell and another $1.6 billion to Sun Microsystems . There was the $775 million paid to IBM in 2005; $1 billion to Real Networks; the $1.1 billion paid to the state of California. And the list goes on.
The fact is, any one of these settlements would be a big deal on their own. But they become a huge deal out of the sheer volume of settlement checks Microsoft has written. Break the law, make your billions, and wait for prosecutors and plaintiffs' attorneys to catch up with you later when the settlement you'll write--or the fine you'll pay--will likely be only a fraction of the revenue you generated along the way. Cost of doing business, plain and simple.
And you'd think such a big fine as the one announced today by the EU would be a public relations black eye for Microsoft. Yet the company has done this so many times that we're almost numb to it. So what. Another big fine that doesn't even come close to measuring up to the profits Microsoft has banked along the way.
Even worse, such a "big" fine really isn't all that big at all: the $1.35 billion Microsoft will have to pay works out to about two weeks of free cash flow for the company! That's not even a slap on the wrist. It's a traffic ticket. The real news here will be what, if anything, the EU decides to do next. And with more and more software moving online, it's not really clear the EU can do much since Microsoft will be able to reach its customers directly on the internet. Makes it hard for the EU to curb the company's business practices with the net acting as great equalizer.
Microsoft will make a call down to petty cash and move on.
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