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The EU Commission's Fine on Microsoft - What's Wrong With It? ~pj Updated
Thursday, March 07 2013 @ 06:02 PM EST

Gregg Keizer at ComputerWorld has some legal experts' reactions to the EU Commission's fine on Microsoft for failure to live up to its promises regarding making competing browsers available to users. The consensus is that it's incomprehensible that the Commission left oversight of the matter to Microsoft, who, of course, told them that all was going fine even when it was not:
"The reports we were receiving had not signaled us of this breach," said Joaquin Almunia, the head of the antitrust agency, when asked how the oversight went undetected for over a year.

Those reports, it turned out, were coming from Microsoft. "We trusted in the reports on the compliance [from Microsoft]," said Almunia. "We were not trying to explore Windows Service Pack 1. But maybe we should have tried to complement their reports."

He admitted the Commission may have made a mistake letting Microsoft police itself, rather than appointing an external overseer. "In 2009, we were even more naive than today," Almunia added.

Could be. But that's not the only problem.

What about the fact that in effect Microsoft has been able to "buy" noncompliance? By that I mean, the browser screen was supposed to be made available for 5 years. It wasn't made available for 14 months. Is the browser screen going to be kept in effect 14 months longer than the original cutoff date, to make up for that breach? According to this New York Times article, the date is still 2014. If so, Microsoft makes out like a bandit, once again. I've written to the EU Commission asking them about this issue, and I'll post any reply I receive.

Update: I heard from Maria Madrid, Press Officer: "The formal duration of the commitments has not been extended, but the Commission takes note that Microsoft intends to offer the browser choice screen for an additional period of 15 months after the end of the commitments."

Unfortunately, Microsoft's statement indicates that they expect a formal response from the EU Commission, so there seems to be a miscommunication:

Offered to Extend our Compliance Period: Since we have fallen short in our responsibility to display the BCS, we have offered to extend the time during which we are obliged to do so by an additional 15 months. We understand that the Commission will review this matter and determine whether this is an appropriate step for Microsoft to take. We understand that the Commission may decide to impose other sanctions.
But, you may say, at least they are paying a large fine. At least it cost them some money. Well, did it? Let's think. The EU Commission's press release tells us this about the results of the browser screen being initially available:
The choice screen was provided as of March 2010 to European Windows users who have Internet Explorer set as their default web browser. While it was implemented, the choice screen was very successful with users: for example, until November 2010, 84 million browsers were downloaded through it in 9 months.
That's 84 million browsers that were not IE being downloaded by users who otherwise presumably would have used IE. After all, if they already knew about the other browsers and knew how to download them, they wouldn't need a browser screen. Cynics, including me, might wonder if that is what caused the alleged "technical error" that erased the browser screen for the next 14 or so months. And yet, when doing EU Commission math, which may have come from Microsoft one might imagine, all things considered, Mr. Almunia says that in the 14 months from May 2011 to July 2012, when the "technical error" was revealed to the EU Commission, "approximately 15.3 million users did not see the ballot as intended," Keizer says Almunia said.

If there were 84 million downloads in 9 months, how can the math be credible that only 15.3 million users were deprived of the ballot screen in *14* months? I'd be interested in seeing support for that figure.

Bloomberg News notes that Mozilla said its downloads went down dramatically during the 14 months:

Mozilla Corp. General Counsel Harvey Anderson said in an October blog post that daily downloads of his companyís Firefox browser fell by 63 percent prior to Microsoft fixing the browser-choice issue and that the company may have lost as many as 9 million potential downloads as a result of the glitch.
And let's remember the purpose of the ballot screen, as the EU Commission itself described it back in 2009 in its press release:
Under the commitments approved by the Commission, Microsoft will make available for five years in the European Economic Area (through the Windows Update mechanism) a "Choice Screen" enabling users of Windows XP, Windows Vista and Windows 7 to choose which web browser(s) they want to install in addition to, or instead of, Microsoft's browser Internet Explorer.

The commitments also provide that computer manufacturers will be able to install competing web browsers, set those as default and turn Internet Explorer off.

Today's decision follows a Statement of Objections sent to Microsoft by the Commission on 15 January 2009 (see MEMO/09/15). The Statement of Objections outlined the Commissionís preliminary view that Microsoft may have infringed Article 82 of the EC Treaty (now Article 102 of the Treaty on the Functioning of the European Union) by abusing its dominant position in the market for client PC operating systems through the tying of Internet Explorer to Windows.

The Commissionís preliminary view was that competition was distorted by Microsoft tying Internet Explorer to Windows. This was because it offered Microsoft an artificial distribution advantage not related to the merits of its product on more than 90 per cent of personal computers. Furthermore, the Commission's preliminary view was that this tying hindered innovation in the market and created artificial incentives for software developers and content providers to design their products or web sites primarily for Internet Explorer.

The approved commitments address these concerns. PC users, by means of the Choice Screen, will have an effective and unbiased choice between Internet Explorer and competing web browsers. This should ensure competition on the merits and allow consumers to benefit from technical developments and innovation both on the web browser market and on related markets, such as web-based applications.

The Commission's decision is based on Article 9 of Regulation 1/2003 on the implementation of EU antitrust rules. It takes into account the results of the market test launched in October 2009 (see MEMO/09/439). This decision, which does not conclude whether there is an infringement, legally binds Microsoft to the commitments it has offered and ends the Commission's investigation. If Microsoft were to break its commitments, the Commission could impose a fine of up to 10% of Microsoft's total annual turnover without having to prove any violation of EU antitrust rules.

A clause in the commitments allows the Commission to review the commitments in two years. Microsoft will report regularly to the Commission, starting in six months' time, on the implementation of the commitments and under certain conditions make adjustments to the Choice Screen upon the Commission's request.

Emphasis added, to highlight that there were benefits anticipated from the browser screen, benefits not encouraged for 14 months, and the beneficiary of that lapse is rather obviously Microsoft.

At least the EU Commission is doing something, which is more than the US is doing. But Microsoft... how can anyone still be naive about Microsoft? Why would any agency believe what they say without checking, setting up a system where nobody had to check up on them for two years, given the track record? And they can't say nobody warned them. They ignored what ECIS told them at the time:

We stress however that implementation that effectively delivers choice for consumers and a level-playing field for competitors, depends on robust and sustained monitoring and enforcement of the settlement.

Our emphasis on enforcement is based on years of familiarity with Microsoft's inadequate commitments and broken promises.

They should have listened.

ECIS provided the EU Commission with a history of Microsoft anticompetitive behavior, and it also told the EU Commission that Microsoft had a history "of vitiating measures designed to promote competition."

And that's why legal experts here have their jaws hanging open, finding it incredible that the EU Commission let Microsoft act on the honor system, nor do they all believe Microsoft's self-serving alibi:

"The Federal Trade Commission, where I used to work, has an entire compliance department, with lawyers and economists, to make sure orders are complied with," said Robert Lande, a law professor at the University of Baltimore and director of the American Antitrust Institute. "That's kind of elementary. It's not rocket science."

Lande also blasted the Commission for allowing a repeat offender to police itself. "Why would you put a three-time offender on the honor system?" Lande asked, referring to other antitrust actions against Microsoft, both in the U.S. and in the EU, that have resulted in billions in fines.

Lande thought the explanation incredulous. "You can't say it's accidental for 15 months," he argued today. "Microsoft says it was a technical glitch, okay, one month, I understand, you left it out of a batch. But not for 15 months. That doesn't look like an accident to me."

Not to me either. Kudos to Keizer for the article, which I hope you read in full. You can find all the documents related to this case here.

And may I add, no agency should believe what they say about their competitors without checking, either. Take it from the US, where we watched Microsoft's fancy dancing to delay obedience to the US compliance requirements after the US v. Microsoft case. The EU Commission itself has some experience with having to fine Microsoft to ensure compliance before, too. Now we have been watching Microsoft on an anti-Google FUD campaign, in the media and to regulators, along with its running dogs, all of whom complain about Google in chorus. I have concluded, personally, that Microsoft just doesn't want to be the only tech company punished for anticompetitive behavior.


  


The EU Commission's Fine on Microsoft - What's Wrong With It? ~pj Updated | 120 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Korrectitons --> Corrections Here
Authored by: OpenSourceFTW on Thursday, March 07 2013 @ 06:12 PM EST
Fix stuff here.

[ Reply to This | # ]

Newspicks Here
Authored by: OpenSourceFTW on Thursday, March 07 2013 @ 06:13 PM EST
We like linkys, so use 'em please.

[ Reply to This | # ]

Off Topic
Authored by: OpenSourceFTW on Thursday, March 07 2013 @ 06:14 PM EST
So off topic it's almost on topic.

Keep it that way :P.

[ Reply to This | # ]

Comes Here
Authored by: OpenSourceFTW on Thursday, March 07 2013 @ 06:17 PM EST
Comes transcriptions here
Microsoft's misbehavior
We must expose now.


Yes I know I am terrible. Deal with it XD.

[ Reply to This | # ]

The EU Commission's Fine on Microsoft - What's Wrong With It? ~pj
Authored by: Anonymous on Thursday, March 07 2013 @ 06:37 PM EST
The browser choice screen has worked well, it has forced
Microsoft to make their browser more standards compliant.
There is still a long way to go though.

I am a web developer, I use to have to spend at least twice
the amount of time on IE than other browsers simply to make
it display correctly in that browser.

I actually think the fine they go was not big enough of a
deterrent.

When are they going to investigate Windows 8, and secure
boot?

[ Reply to This | # ]

In the coming months
Authored by: BJ on Thursday, March 07 2013 @ 07:27 PM EST
just keep an eye on who's buying new cars, houses,
yachts, jewelry.


bjd

[ Reply to This | # ]

Let's do the numbers
Authored by: swmcd on Thursday, March 07 2013 @ 07:44 PM EST
84e6 downloads / 9 months * 14 months = 131e6 downloads

$731e6 fine / 131e6 downloads = $5.58 / download

$5.58 is their customer acquisition cost.
In the software business, $5.58/customer is a bargain-basement price.
Microsoft would have had to pay far more to acquire those customers on their
own.
Buying them from the EU for the low, low price of only $5.58 was an *excellent*
business decision.

[ Reply to This | # ]

OOXML is a recent example of questionable honesty, too
Authored by: Anonymous on Thursday, March 07 2013 @ 09:40 PM EST
The ISO has approved one, and only one, standard for creating new office
documents - Open Document Format.

ISO doesn't like to approve multiple standards that do the same thing, but ISO
was persuaded to approve OOXML because the argument was made to ISO that OOXML
was somehow different. It was not, the argument went, a format for creating new
documents. Rather, it was a format created for the purpose of "carrying
forward" old documents that had some associated functionality tied to them,
such as a tie-in to a database.

If parties behaved consistently with their words, then OOXML (once anyone starts
using it, .docx and the like are of course not compliant OOXML) would be a
legitimate format albeit one that is very rarely needed or used, and only used
for its narrow use case, carrying forward old documents into XML.

Any honest purveyor of office software worth its salt would set as the default
format in its software for creating new documents the only ISO-approved format
for new documents, Open Document Format - and would support it well.

So is that what happened? Well, I see recent software from the predominant
office suite dinosaur that sets abominations like .docx as the default for NEW
documents. This is dishonest, this is wrong, this is not what the ISO and the
world were told.

And I see lackluster support for ODF in that software as well, to the extent
that the version 1.1 IIRC that is in, say, Office 2010 has issues caused by poor
support by the purveyor. And, if I heard correctly, in Office 2013 ODF 1.2 will
be available, but any documents created in Office 2013 will not be
backwards-compatible with Office 2010's ODF.

So crap support for the only real new document format, but a strong push for
everyone to use as a default their false old format.

And how much do you want to bet the "carry forward old documents"
format "OOXML (or its .docx etc analogs) will be set as the default in
Office 2013, and not ODF, as it should be?

To me this is dishonesty through and through. I don't see why governments or
standards bodies allow these kinds of shenanigans. When is Europe going to fine
office suite producers for setting the wrong document format as a default, and
lying to the world and to the ISO? When are governments going to say, there is
only one ISO-approved new document format, our laws require us to use
ISO-approved formats, therefore we will use only ODF for new documents? And
when are standards bodies aka the ISO going to revoke the OOXML standard, on the
grounds that they were lied to, and the OOXML standard is being pushed to be
used for a purpose it was not designed for?

Oh, look! I think I just saw something porcine fly past my Windows.

[ Reply to This | # ]

The EU Commission's Fine on Microsoft - What's Wrong With It? ~pj
Authored by: Anonymous on Friday, March 08 2013 @ 07:22 AM EST
You should just rename this blog "googleLaw" and be done with it....

[ Reply to This | # ]

2 issues with a larger fine
Authored by: Anonymous on Friday, March 08 2013 @ 01:26 PM EST
There are 2 issues I can see that may have been impediments
to giving a larger fine.

1. In 14 months, the users didn't notice.
2. Failure to monitor the situation.

Valid or not, these might have opened the door to another
long running litigation before MS would pay.

[ Reply to This | # ]

Let's Look at the Actual Numbers
Authored by: Anonymous on Friday, March 08 2013 @ 04:49 PM EST
That's 84 million browsers that were not IE being downloaded by users who otherwise presumably would have used IE. After all, if they already knew about the other browsers and knew how to download them, they wouldn't need a browser screen.

There are companies who track web browser use via web analytics services (web sites use third parties to audit their traffic so they can bill their advertisers). HTTP headers contain information on what web browser someone used to visit a web site, and some of those web analytics companies make summaries of that information public. We can look at that data to see if there were any changes in web browser usage over the time period in question.

Here's some popular data from Statcounter Global Stats. This data covers Europe from July 2008 (the earliest they have) up to February 2013 (the newest they have). If we look at the line for Microsoft IE, what we see is a steady decline throughout that whole period. There was no recovery or even slowing of the decline between May 2011 to July 2012 (the period when the browser ballet was not working). Indeed, by May 2012, MS IE had fallen to third place behind Google Chrome and Mozilla Firefox. In the time since, MS IE has continued to decline, with MS IE versions 9 and 10 having no apparent ability to halt or even slow the decline.

If we look at the actual data, we can't in fact see influence from the browser ballet. MS IE market share declined steadily before the browser ballet, it declined at the same rate while the browser ballet was initially in effect, it declined at the same rate while the browser ballet was "suspended", and it continued to decline at the same rate when the browser ballet was enabled again.

In other words, the presence or absence of the browser ballet had no visible effect on how many people used MS IE. Nothing Microsoft has been able to do in the past 5 years or more has been able to slow their seemingly inexorable fall in market share. Indeed, the "technical difficulty" in the browser ballet system has been helpful to people who are analysing the market because it shows that browser users simply don't want MS IE and seem to be able to choose for themselves what to use.

Any readers in the USA, need to realize that their own local experience doesn't apply to Europe. The equivalent graph for the USA shows that MS IE being the number 1 browser throughout the same period, although it does show a similar overall steady decline. In other words, Americans seem to be in love with MS IE (although less so now than earlier), but Europeans never liked it very much and were much more willing to use a different browser without any prompting by the EU. All these arguments about "the average person only knows how to click on the big blue 'E' button" may apply to the USA, but they simply weren't true for Europeans.

Here's the raw data for anyone who wants to analyse it themselves. This data covers Europe only.

"Date","IE","Firefox","Chrome","Safari","Opera","Other"
200 8-07,58.19,35.52,0,2.37,3.69,0.22
2008-08,58.31,35.53,0,2.47,3.49,0.2
2008-09,56.35,33.77,1.04,2.45,6.2,0.19
2008-10,56.52,33.41,0.98,2.52,6.38,0 .18
2008-11,55.08,33.74,0.91,2.3,7.77,0.19
2008-12,51.84,36.7,1.25,2.2 5,7.35,0.62
2009-01,50.48,37.71,1.38,2.3,7.25,0.88
2009-02,50.29,37.69 ,1.49,2.38,7.29,0.86
2009-03,49.13,38.54,1.73,2.43,7.34,0.83
2009-04,47.89,39.04,2.05,2.53,7.63,0.86
2009-05,46.65,38.59,2.49,2.52 ,8.75,1.01
2009-06,45.97,38.79,2.78,2.64,8.69,1.12
2009-07,46.69,39.7, 3.05,2.81,6.84,0.9
2009-08,46.01,39.62,3.36,2.95,7.12,0.94
2009-09,46. 44,39.26,3.59,3.14,6.64,0.94
2009-10,47.78,39.87,3.99,3.37,4.05,0.94
2 009-11,46.57,40.12,4.43,3.52,4.27,1.08
2009-12,44.84,40.8,5.06,3.4,4.44,1.4 6
2010-01,44.91,39.86,5.78,3.68,4.33,1.45
2010-02,45.5,38.99,6.52,3.67 ,4.29,1.02
2010-03,45.32,38.28,7.36,3.76,4.32,0.96
2010-04,44.1,38.72, 8.27,3.8,4.15,0.96
2010-05,43.32,38.61,8.89,3.88,4.41,0.9
2010-06,43.1 8,38.09,9.6,3.9,4.4,0.83
2010-07,42.61,37.98,10.13,3.89,4.55,0.85
2010 -08,42.01,37.94,10.81,4.11,4.33,0.8
2010-09,40.26,38.97,11.32,4.32,4.48,0.6 5
2010-10,39.52,38.66,12.29,4.55,4.38,0.61
2010-11,38.91,38.5,13.09,4. 64,4.27,0.59
2010-12,37.52,38.11,14.58,4.62,4.57,0.6
2011-01,36.91,37. 92,15.47,4.91,4.23,0.56
2011-02,36.44,37.56,16.28,4.87,4.27,0.57
2011- 03,35.92,37.12,17.19,4.88,4.31,0.57
2011-04,35.27,36.84,18.14,4.93,4.22,0.6 1
2011-05,35.15,36.19,18.87,5.16,3.94,0.69
2011-06,35.47,34.67,19.96,5 .3,3.91,0.68
2011-07,35.12,34.2,20.92,5.24,3.8,0.71
2011-08,34.7,33.79 ,21.8,5.32,3.73,0.66
2011-09,34.87,33.04,22.1,5.56,3.78,0.66
2011-10,3 3.14,33.17,23.35,5.73,3.91,0.71
2011-11,32.56,32.55,24.37,5.81,4,0.72
2011-12,31.28,32.45,25.54,5.84,4.13,0.76
2012-01,31.05,31.19,26.86,6.31,3.8 3,0.77
2012-02,30.61,30.69,27.9,6.42,3.73,0.66
2012-03,30.22,30.48,28. 5,6.44,3.68,0.69
2012-04,29.37,30.44,29.09,6.89,3.42,0.79
2012-05,28.3 5,30.78,29.47,7.14,3.42,0.84
2012-06,28.19,30.08,30,7.29,3.4,1.03
2012 -07,27.71,29.84,30.69,7.32,3.38,1.06
2012-08,27.33,29.54,31.1,7.49,3.42,1.1 3
2012-09,27.1,29.24,31.48,7.81,3.31,1.07
2012-10,26.12,29.29,32.39,7. 8,3.31,1.1
2012-11,25.34,29.57,33.23,7.96,2.71,1.19
2012-12,24.36,29.5 5,34.16,7.99,2.54,1.4
2013-01,24.47,28.64,34.58,8.35,2.36,1.59
2013-02 ,23.64,28.69,35.02,8.6,2.39,1.66

[ Reply to This | # ]

Did google snitch on Microsoft?
Authored by: kh on Friday, March 08 2013 @ 11:48 PM EST
Perhaps Google snitched?

Why should it matter really who snitched?

[ Reply to This | # ]

The EU Commission's Fine on Microsoft - What's Wrong With It? ~pj
Authored by: Anonymous on Saturday, March 09 2013 @ 02:59 PM EST
PJ wrote:
Is the browser screen going to be kept in effect 14 months longer than the original cutoff date, to make up for that breach? According to this New York Times article, the date is still 2014.
From Microsoft's statement:

Offered to Extend our Compliance Period: Since we have fallen short in our responsibility to display the BCS, we have offered to extend the time during which we are obliged to do so by an additional 15 months. We understand that the Commission will review this matter and determine whether this is an appropriate step for Microsoft to take. We understand that the Commission may decide to impose other sanctions.
So it might not be over. Maybe Brussels is just not in a hurry to decide on this one. Although it might be that Microsoft thought they could evade the fine by just offering to extend the time, but the commission decided to impose the fine instead. We will see if this is already over or if there is more to come.

[ Reply to This | # ]

The EU Commission's Fine on Microsoft - What's Wrong With It? ~pj
Authored by: Anonymous on Saturday, March 09 2013 @ 10:24 PM EST
"That's 84 million browsers that were not IE being
downloaded by users who otherwise presumably would have used
IE"

I'm not sure that this means 84M non-IE browsers... simply
84M browsers which could possibly include IE as well.

I think the idea that users not presented with the ballot
would simply use IE is inaccurate (and given the numbers
provided earlier, is provably wrong). It is incredibly easy
to download another browser and for many people it's just
one of the things you do when you get a new computer. Many
people have two, three or four browsers installed!

I know my opinion probably won't gain much traction on this
law site, but... this browser saga has gone on long enough
and is no longer relevant to the way the internet and
browsers work today. It's just punishment for the sake of
punishment; the wronged parties are no longer really around,
and multiple (and superior) competitors have arisen and
thrived despite Microsoft's practices. It feels like,
finding some woman who managed to vote in 1915 and sending
her to jail today.

[ Reply to This | # ]

CEO's won't stop.
Authored by: Anonymous on Monday, March 11 2013 @ 09:48 PM EDT
Until CEO's are held accountable, either by the respective company board or
criminally prosecuted, these CEO's will continue to do illegal things as long as
the fine is covered by the company and the profit from doing it anyway exceeds
the costs.
For example, most of the more annoying microsoft stuff would stop if Ballmer
were either fired by the board or put in jail,(in the event that MS ever did
anything illegal). For that matter, it would probably stop if the board members
were held accountable.

[ Reply to This | # ]

The EU Commission's Fine on Microsoft - What's Wrong With It? ~pj Updated
Authored by: luvr on Wednesday, March 13 2013 @ 04:55 PM EDT
Heh... Just recently, I saw the browser selection screen for the very first time, when I assisted an upgrade process of a Windows 7 install. I must admit, I was pretty surprised at encountering it...

The silly thing is, the user of that computer felt lost at the selection screen, and his first reaction was: “Can't I simply skip this?”

He had been using Internet Explorer until then, and dreaded the idea of having to switch to anything else. In fact, he never wants to touch any of my computers at home, because none of them run Windows—so they cannot be “real” computers. In fact, come to think of it, I wouldn't want to let him touch any of my computers anyway...

[ Reply to This | # ]

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