Microsoft faces $3bn antitrust fine

The European Commission has warned Microsoft that it faces a fine of up to $3bn (£1.86bn) unless it agrees to modify its anti-competitive behaviour.

The Commission's antitrust probe is investigating Microsoft's bundling of Windows Media Player with its operating system, and whether it used its dominance in the PC market to make gains in the low-end server space.

But market watchers have expressed scepticism about the impact of a fine on the software giant.

"The signs are that, despite early rhetoric, the outcome of the Commission's action will be comparable to that of the Department of Justice in America: a very public and costly exercise in closing the stable door after the horse has bolted," said Gary Barnett, IT research director at analyst firm Ovum.

Microsoft had been threatened with an enforced break-up after being found guilty by US courts of anti-competitive behaviour. But US officials subsequently backed down.

The Commission has the power to fine Microsoft up to 10 per cent of the company's global turnover. For Microsoft, that is potentially a fine of $3bn, but it is unlikely to be so high.

"The Commission's 'tougher stance' is part of a well rehearsed game that regulators and vendors play in the course of resolving antitrust issues," Barnett added.

"Microsoft will probably be relieved that the EU's complaint hasn't changed substantially, and over the coming months there will be plenty of horse-trading before the deal is finally done."

A preliminary report, which indicated that Microsoft was still abusing its market position, called for the firm to make it easier for rival server vendors to interface with Windows, and to either unbundle Media Player or offer a competing product with its operating system.

Microsoft said it will examine the report thoroughly with a view to responding as according to the official timelines.

"We will not speculate on possible outcomes or the suggested remedies, and continue to focus our efforts on responding to the Commission's concerns.

"Microsoft takes this investigation very seriously, and continues to work hard to maintain a dialogue that will allow positive resolution to the Commission's concerns," said Horacio Gutierrez, director of legal and corporate affairs for Microsoft Middle East and Africa, in a statement.