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Eurofines Ruin Microsoft's Big Day

OK, so Microsoft's big server launch day wasn't exactly a surprise, and it wasn't full of surprises, either.

Still, the unveiling of Windows Server, SQL Server and Visual Studio -- all vintage 2008 -- must have required a huge amount of work. There were the logistics of managing the event itself, the preparation of executive presenters, the handling of the press and other hangers-on -- not to mention the years of development that went into the products (sort of) making their debuts. Some positive headlines would have been nice, even for a press-eating behemoth like Microsoft. Everything was in place for a lovely event.

And then the European Union dropped this: "European Commission Slaps Microsoft With $1.3 Billion Fine."

Oh, now that's just mean. Rain on the parade, something dark floating in the punch bowl, some sort of liquid in the corn flakes -- whatever metaphor seems to work best, there's no doubt that the EU's antitrust commission dumped all over Microsoft's big to-do. And all of this after Microsoft so nobly (here, we're being really sarcastic -- like Juno sarcastic) committed itself to openness last week by publishing tens of thousands of pages of technical specs and promising to license patented protocols for dirt-cheap prices.

Obviously, Microsoft's belated response to the EU's 2004 antitrust rulings -- and let's not pretend that the EU wasn't the driving force behind Microsoft's openness epiphany, no matter how magnanimous Redmond tries to appear -- didn't appease the Euroregulators. Or maybe it was a case of too little, too late -- or just plain too late. Before last week's overtures, Microsoft fought and scrapped and battled in the court of public opinion and in actual courts in contesting the EU's findings and, in the end, Microsoft lost. Big time.

Well, not that big time, actually. Keep in mind that Microsoft made more than $50 billion in its last full fiscal year, so the EU's traffic ticket amounts to about 2 percent of Microsoft's annual earnings -- or less, if we consider the fact that Microsoft will surely make more money this fiscal year than it did last, maybe a lot more. (Overall, the EU has hit Microsoft with $2.5 billion in fines, a huge number to you and to us but a relative drop in the bucket to a company the size of Microsoft.) What's more, Redmond had prepared investors for a fine as large as $2.2 billion, so there wasn't much shock value to the figure. So, Microsoft could keep fighting the EU, but it clearly has chosen not to -- or at least not in the way it was trying to before last week's partial capitulation.

We'll spare you the rant on how the EU is meddling where it shouldn't (although, if you really need to read one, here's a classic from last year). We're just wondering how far Microsoft will have to go to appease the Eurocrats and stem the tide of huge fines. What more does the EU want? (To bring down a big American company, we whisper snidely under our breath.) And how far will Brussels go to get it?

We're not really sure, but we'll give the Euros one thing: They're much tougher and more persistent than their American counterparts. They mean business, and they've got Microsoft on the ropes. Plus, their timing is impeccable.

What's your take on the EU slamming Microsoft with fines again? Sound off at lpender@rcpmag.com. Oh, and don't be discouraged by the relative lack of reader feedback these last couple of weeks. We're going to catch up on running your thoughts next week, so keep them coming.

Posted by Lee Pender on February 28, 2008 at 11:54 AM


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