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Europe tickles Microsoft with €561m fine for browser choice gaffe

Redmond told to pay less than 1% of annual revenue

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Updated Microsoft has been fined €561m ($731m, £484m) by the European Commission for breaking an agreement to offer Windows users alternative web browsers to Internet Explorer.

A fresh investigation was launched against Microsoft by Brussels' competition officials in mid-2012 following complaints that the company was still using its Windows operating system to push people into browsing the web with Internet Explorer.

Microsoft signed a legally binding agreement with the commission that required the firm to display a choice screen in Windows that allowed customers in Europe to pick between using IE, Firefox, Chrome and other browsers on the market. The dialogue box was supposed to remain in the operating system until 2014.

But in February 2011, when Microsoft issued its first Windows 7 service pack, the selection screen suddenly vanished from the software.

Last year, Redmond told competition commissioner Joaquin Almunia that it hadn't noticed the browser choice screen had been missing from its operating system for 17 months. This meant 15 million customers were not offered a range of browsers to run on their PCs.

The commission said today that it was imposing a half-a-billion-euro fine on Microsoft for failing to comply with its commitment.

Almunia said in a statement:

Legally binding commitments reached in antitrust decisions play a very important role in our enforcement policy because they allow for rapid solutions to competition problems. Of course, such decisions require strict compliance. A failure to comply is a very serious infringement that must be sanctioned accordingly.

But Microsoft could have been slapped with a much bigger monetary penalty as the commission can demand anything up to 10 per cent of a company's annual revenue. That means Redmond could have faced a gigantic €7.4bn fine.

In working out how to penalise Microsoft, the commission said it took into account the gravity and duration of the infringement. It also considered imposing a fine large enough to grab the company's attention so that it would prevent itself from making the same boob again.

However, Microsoft's cooperation with Almunia's office proved to be a mitigating circumstance that helped keep the fine low in relative terms. ®

Updated to add

The Register asked Microsoft if it planned to appeal the EC's fine. The company told us:

We take full responsibility for the technical error that caused this problem and have apologised for it. We provided the commission with a complete and candid assessment of the situation, and we have taken steps to strengthen our software development and other processes to help avoid this mistake - or anything similar - in the future.

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