Microsoft could owe billions in another antitrust battle

@CNNMoneyTech July 20, 2012: 1:58 PM ET

NEW YORK (CNNMoney) -- Microsoft has gotten caught up once again in an antitrust battle over its Internet Explorer browser -- and this time, it could cost the company billions.

European regulators claim that Microsoft (MSFT, Fortune 500) failed to comply with a 2009 commitment to give PC users in Europe a choice about which browser they use. As of March 2010, a "choice screen" was supposed to pop up when a user was setting up Windows, displaying 11 differing browsers to choose from, including Microsoft's own Internet Explorer.

Microsoft initially complied with the agreement, but stopped showing the choice screen when a Windows 7 update called "Service Pack 1" rolled out in February 2011. The company's compliance reports to the European Commission stated that Microsoft was honoring its commitment, but the software giant recently admitted that it had not been displaying the choice screen.

IE was supposed to be displayed prominently, alongside Apple (AAPL, Fortune 500) Safari, Google Chrome, Mozilla Firefox and Opera. If a user scrolled over the options, they would also be able to choose Avant Browser, Flock, Green Browser, K-Meleon, Maxthon, Sleipnir or Slim Browser.

"We take compliance with our decisions very seriously," said Joaquín Almunia, vice president of the commission in charge of competition policy, in a written statement. "We have immediately taken action. If following our investigation, the infringement is confirmed, Microsoft should expect sanctions."

If Microsoft is found to have breached its legally binding commitments, it can be fined up to 10% of its annual revenue. Last year, Microsoft's sales totaled nearly $70 billion.

Microsoft apologized for the snafu, which it chalked up to a "technical error" that it learned about only after the EU notified the company of the missing choice screen.

"We have fallen short in our responsibility," the company said in its mea culpa statement. "While we have taken immediate steps to remedy this problem, we deeply regret that this error occurred and we apologize for it."

The company says it expects to have the problem completely remedied by the end of the week.

It's the latest skirmish in a fight that was more relevant more than a decade ago, when the browser battles were at their peak. Microsoft faced similar antitrust lawsuits in the United States in the 1990s and early 2000s over its tactic of using its dominant position with Windows to promote its Internet Explorer browser over rivals like the now-defunct Netscape Navigator.

Since then, Microsoft's share of the browser market has gradually eroded. It now controls about half or just less than half the market, according to various surveys by firms like Net Applications and StatCounter, which use differing methodologies. Google (GOOG, Fortune 500) claims that its Chrome 20 Web browser is now the single most-used browser version in the world.

Nevertheless, mounting antitrust violations have become an increasingly expensive problem for Microsoft, which has a history of non-compliance with its European regulator's decisions.

The European Commission in 2004 ruled that Microsoft's tying of certain software to Windows represented an abuse of its dominant position. It was fined €497 million in 2004, then €280.5 million in 2006 for failing to comply with the ruling. In 2008, Microsoft was fined another €860 million for non-compliance.

In all, Microsoft has been fined roughly $2 billion over its European violations. To top of page

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