July 14, 2006 9:05 AM PDT

Week in review: Europe slaps Microsoft

European regulators slapped a hefty fine on Microsoft in their ongoing antitrust dispute, and more fines may be coming.

The European Commission hit Microsoft with a $357.3 million fine, citing the software giant's continued noncompliance with its landmark 2004 antitrust ruling. That figure amounts to a daily fine of 1.5 million euros, which the Commission is prepared to increase to as much as 3 million euros per day if the software giant does not come into full compliance as of July 31.

While the fine is steep, Microsoft would have no trouble paying it. For the first three months of 2006, the company pocketed profits of nearly $3 billion on sales of $11 billion, meaning that the proposed fine amounts to about 10 days' worth of profits.

The fine was based on the Commission's 2004 ruling, which, among other requirements, ordered Microsoft to share complete and accurate interoperability information with rival companies that develop work group server operating systems. It also ordered the company to license those protocols at a reasonable cost.

Neelie Kroes, competition commissioner for the European Union, told CNET News.com that she had "no alternative" to issuing the fine.

"The daily penalty payment of 1.5 million euros that the Commission has imposed today for noncompliance on the first of these points reflects the fact that the failure to provide complete and accurate interoperability information has largely eliminated the effectiveness of the remedy," she said in a CNET News.com interview.

Industry trade groups weighing in on the Commission's decision fell into two camps. One side said the move will discourage U.S. businesses in Europe, while the other said it sets a precedent that will help smaller software companies.

The levying of the fine lit up News.com's TalkBack discussion boards, with many readers bemoaning the software giant's monopoly.

"It's like a convicted thief that was offered community service in place of a prison sentence," one reader wrote to the forum. "Now we find they skipped most of their community service."

Taming the Net
The FBI has drafted sweeping legislation that would require Internet service providers to create wiretapping hubs for police surveillance and force makers of networking gear to build in backdoors for eavesdropping, News.com has learned. FBI agent Barry Smith distributed the proposal at a private meeting with industry representatives and indicated that it would be introduced into the Senate.

The draft bill would place the FBI's Net surveillance push on solid legal footing. The FBI claims that expanding the 1994 Communications Assistance for Law Enforcement Act, known as CALEA, is necessary to thwart criminals and terrorists who have turned to technologies like Internet telephony.

On the other side of the Capitol, the U.S. House of Representatives voted to restrict Internet gambling. By a vote of 317 to 93, politicians approved a controversial bill that tries to eliminate many forms of online gambling by targeting ISPs and financial intermediaries, namely banks and credit card companies that process payments to offshore Web sites.

See more CNET content tagged:
CALEA, fine, antitrust, commission, euro

 

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