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| Europe Expected to Levy Big Fine Against Microsoft | Europe Expected to Levy Big Fine Against Microsoft |
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| BRUSSELS — European antitrust officials are expected to impose a large fine on Microsoft on Wednesday for failing to give users of the company’s Windows software the choice of competing Internet browsers. | BRUSSELS — European antitrust officials are expected to impose a large fine on Microsoft on Wednesday for failing to give users of the company’s Windows software the choice of competing Internet browsers. |
| It would be the first time the European Union has punished a company for neglecting to comply with the terms of an antitrust settlement. Microsoft and European antitrust officials reached a settlement over the browser-access issue in 2009. But last October, the Union’s antitrust chief, Joaquín Almunia, charged Microsoft with failing to live up to the agreement. | It would be the first time the European Union has punished a company for neglecting to comply with the terms of an antitrust settlement. Microsoft and European antitrust officials reached a settlement over the browser-access issue in 2009. But last October, the Union’s antitrust chief, Joaquín Almunia, charged Microsoft with failing to live up to the agreement. |
| The amount of the fine could not be learned on Tuesday. Mr. Almunia’s office and Microsoft executives declined to comment. The company had previously emphasized that the failure was a mistake it regretted. | The amount of the fine could not be learned on Tuesday. Mr. Almunia’s office and Microsoft executives declined to comment. The company had previously emphasized that the failure was a mistake it regretted. |
| The significance of the action expected Wednesday could reach beyond Microsoft. It comes as Mr. Almunia’s office is negotiating with Google to try to settle the commission’s concerns about that company’s dominance of the Internet search and advertising markets. Even if Google and the Union reach a settlement, a substantial fine for Microsoft would serve as a warning that a company violates such a settlement at its financial peril. | The significance of the action expected Wednesday could reach beyond Microsoft. It comes as Mr. Almunia’s office is negotiating with Google to try to settle the commission’s concerns about that company’s dominance of the Internet search and advertising markets. Even if Google and the Union reach a settlement, a substantial fine for Microsoft would serve as a warning that a company violates such a settlement at its financial peril. |
| “It’s important for the commission to show it’s serious in this case because this will set a precedent, and because the commission increasingly uses settlements to help reach solutions more quickly, especially in the fast-moving technology sector,” said Nicolas Petit, a professor of competition law and economics at the University of Liège in Belgium. | “It’s important for the commission to show it’s serious in this case because this will set a precedent, and because the commission increasingly uses settlements to help reach solutions more quickly, especially in the fast-moving technology sector,” said Nicolas Petit, a professor of competition law and economics at the University of Liège in Belgium. |
| “The commission also has an incentive to slap on a big fine in this case to ensure that companies, which are hard to monitor, get the message that it will be costly down the road if they get caught defying settlement orders,” Mr. Petit said. | “The commission also has an incentive to slap on a big fine in this case to ensure that companies, which are hard to monitor, get the message that it will be costly down the road if they get caught defying settlement orders,” Mr. Petit said. |
| In theory, Mr. Almunia can levy a fine totaling up to 10 percent of a company’s global annual revenue. In Microsoft’s case that could mean a penalty of $7 billion, but analysts say it is highly unlikely to reach that level. | In theory, Mr. Almunia can levy a fine totaling up to 10 percent of a company’s global annual revenue. In Microsoft’s case that could mean a penalty of $7 billion, but analysts say it is highly unlikely to reach that level. |
| The largest single fine ever levied by the European authorities in an antitrust case was €1.1 billion, or $1.4 billion, in 2009 against Intel for abusing its dominance in the computer chip market. Intel is still appealing that ruling. | The largest single fine ever levied by the European authorities in an antitrust case was €1.1 billion, or $1.4 billion, in 2009 against Intel for abusing its dominance in the computer chip market. Intel is still appealing that ruling. |
| Microsoft has paid a long series of fines to European regulators over the past decade. | Microsoft has paid a long series of fines to European regulators over the past decade. |
| In 2008, it was fined nearly €900 million in so-called periodic penalties for defying a decision that regulators had imposed on the company. | In 2008, it was fined nearly €900 million in so-called periodic penalties for defying a decision that regulators had imposed on the company. |
| The amount was subsequently reduced to €860 million, after the company appealed to the General Court of the European Union. | The amount was subsequently reduced to €860 million, after the company appealed to the General Court of the European Union. |
| Microsoft also paid fines of €497 million and €281 million for separate but related offenses, bringing the total to €1.7 billion during its battles so far with European regulators. | Microsoft also paid fines of €497 million and €281 million for separate but related offenses, bringing the total to €1.7 billion during its battles so far with European regulators. |
| In the current case, Mr. Almunia had warned Microsoft last summer that on some occasions its software was still not providing users the full access to competing Web browser programs, as called for in the 2009 settlement. The company apologized in July, calling it a technical problem of which it had only recently become aware. | In the current case, Mr. Almunia had warned Microsoft last summer that on some occasions its software was still not providing users the full access to competing Web browser programs, as called for in the 2009 settlement. The company apologized in July, calling it a technical problem of which it had only recently become aware. |
| In October Mr. Almunia put Microsoft on notice that it must include adequate access to rival browsers in European versions of its next-generation operating system, Windows 8, which was about to go on sale. | In October Mr. Almunia put Microsoft on notice that it must include adequate access to rival browsers in European versions of its next-generation operating system, Windows 8, which was about to go on sale. |
| Although Microsoft has lodged court appeals in the past against punishments handed down by the commission, it may be reluctant to do so this time, preferring to put the previous acrimony to rest as it focuses on its rivalry with Google. Microsoft is among the companies that have complained about Google’s business practices to the commission. | Although Microsoft has lodged court appeals in the past against punishments handed down by the commission, it may be reluctant to do so this time, preferring to put the previous acrimony to rest as it focuses on its rivalry with Google. Microsoft is among the companies that have complained about Google’s business practices to the commission. |
| The commission has been formally investigating Google since November 2010. Mr. Almunia offered the company a settlement in May 2012 after finding that it might have abused its dominance in Internet search and advertising by giving its own products an advantage over those of others, even while maintaining that it offered neutral results. | The commission has been formally investigating Google since November 2010. Mr. Almunia offered the company a settlement in May 2012 after finding that it might have abused its dominance in Internet search and advertising by giving its own products an advantage over those of others, even while maintaining that it offered neutral results. |
| Mr. Almunia and Google have been negotiating since then and a final agreement may not come until later this year, suggesting that the strategy of seeking quick results in antitrust technology cases could be coming undone. | Mr. Almunia and Google have been negotiating since then and a final agreement may not come until later this year, suggesting that the strategy of seeking quick results in antitrust technology cases could be coming undone. |
| The commission has taken a tougher line with Google than did the U.S. Federal Trade Commission, which decided in January after a 19-month inquiry that Google had not broken antitrust laws. But unlike the F.T.C., Mr. Almunia has insisted that Google make changes to the most sensitive area of its business, online searching. | The commission has taken a tougher line with Google than did the U.S. Federal Trade Commission, which decided in January after a 19-month inquiry that Google had not broken antitrust laws. But unlike the F.T.C., Mr. Almunia has insisted that Google make changes to the most sensitive area of its business, online searching. |
| The latest dispute stemmed from the settlement of a case concerning Microsoft’s dominance in Internet browsers, a dominance that the company has relinquished to market forces in recent years. | The latest dispute stemmed from the settlement of a case concerning Microsoft’s dominance in Internet browsers, a dominance that the company has relinquished to market forces in recent years. |
| In Microsoft’s settlement of 2009, the company did not pay a fine but agreed to install a system called Browser Choice Screen with Windows. It was intended to offer alternatives like Google Chrome and Mozilla Firefox to counter the strength of Internet Explorer, Microsoft’s own browser. The choice must be offered for five years, according to the agreement. | In Microsoft’s settlement of 2009, the company did not pay a fine but agreed to install a system called Browser Choice Screen with Windows. It was intended to offer alternatives like Google Chrome and Mozilla Firefox to counter the strength of Internet Explorer, Microsoft’s own browser. The choice must be offered for five years, according to the agreement. |
| Millions of European users of the Windows 7 SP1 version of the software may not have been offered a choice of browsers from February 2011 to July 2012, Mr. Almunia said. | Millions of European users of the Windows 7 SP1 version of the software may not have been offered a choice of browsers from February 2011 to July 2012, Mr. Almunia said. |
| The company said it learned of the error when the commission sent a notification about reports it had received indicating that alternative browsers were not being offered on some personal computers. | The company said it learned of the error when the commission sent a notification about reports it had received indicating that alternative browsers were not being offered on some personal computers. |
| Microsoft’s failure to comply with the European order has already resulted in financial penalties of a different sort for the company’s own executives. In a filing with U.S. financial regulators last October, Microsoft said Steven A. Ballmer, the company’s chief executive, and Steven Sinofsky, then the head of its Windows division, received less than the full annual bonuses they were eligible for, in part because of the browser issue in Europe. | |
| A month later Mr. Sinofsky left the company in a decision that was described as “mutual” by people briefed on the matter who declined to be identified discussing personnel matters. The browser foul-up in Europe was one of the factors in the split between Mr. Sinofsky and Microsoft, these people said. | |
| Nick Wingfield contributed reporting from Seattle. | Nick Wingfield contributed reporting from Seattle. |
This article has been revised to reflect the following correction: | |
| Correction: March 5, 2013 | |
An earlier version of this article misspelled the first name of a former executive with Microsoft. He is Steven Sinofsky, not Sinfosky. |