Microsoft Facing These Massive Penalties

Microsoft’s (NASDAQ:MSFT) punishment for failing to comply with a 2009 ruling in Europe will be swift and just as EU regulators prepare to charge the Seattle-based company for breach of an agreement to offer users a choice of web browsers.

“The next step is to open a formal proceeding into the company’s breach of an agreement. We are working on this,” EU Competition Commissioner Joaquin Almunia told reporters on Thursday. “It should not be a long investigation because the company itself explicitly recognized its breach of the agreement.”

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The European Commission opened its investigation into the case in July. Microsoft is said to be the first company to have failed to meet its commitments under EU antitrust decisions. If found guilty, the company will be facing fines of up to 10 percent of its global turnover.

In 2009, Microsoft agreed to allow European consumers better access to rival browsers in its Windows software, thus setting an antitrust case and avoiding a more severe penalty that could have been set at up to 10 percent of its turnover. Now Microsoft, which has acknowledged not offering users a choice of browsers in its Windows 7 operating system from February 2011, may be issued the penalty it avoided nearly three years ago.

The case against Microsoft doesn’t look good, and it wouldn’t be the first time the company faced hefty fines for refusing to play by the rules. Microsoft has been fined more than 1 billion euros by the Commission over the last decade for breaching various EU rules.

Google (NASDAQ:GOOG) would do well to take Microsoft’s missteps in Europe to heart, as the company is now finding itself in a similar mess there. Almunia has warned the search giant that, if it does not do more to ease concerns that it may have undermined competitors, that it, too, could be looking at a lengthy legal fight.

The Commission has been in technical talks over a possible settlement with Google for the last three months. “If remedies offered by Google can eliminate our concerns, we will succeed in reaching an agreement,” Almunia said at a forum on competition in Warsaw. “I hope we succeed in these talks as the legal road takes much longer and this is a fast moving market.”

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