Here’s Why Microsoft Is In Trouble

On Wednesday, the European Commission charged Microsoft (NASDAQ:MSFT) with an antitrust violation after the company failed to comply with its commitment to allow users of its Windows operating system a choice of Internet browsers as per a 2009 settlement.

In January 2009, the Commission sent Microsoft a Statement of Objections stating that the company had abused its dominance in the PC market. To alleviate the regulators’ concerns, Microsoft agreed to set up a “ballot screen” in the operating system to enable users to choose their preferred browser. However, the Commission stated that it took “the preliminary view that Microsoft has failed to roll out the browser choice screen with its Windows 7 Service Pack 1, which was released in February 2011.”

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

As a result, the company may have to pay a substantial fine for the defying the terms of the settlement.

This case is the first instance that a company facing antitrust penalties from European regulators has been sent a Statement of Objections for failing to comply with a settlement.

European Union antitrust commissioner Joaquín Almunia told Microsoft that the company must include adequate access to rival browsers in the European versions of its latest operating system, Windows 8, which will be available at the end of the week.

In response to the commission’s charge, Microsoft said, “Although this was the result of a technical error, we take responsibility for what happened, and we have taken steps to strengthen our internal procedures to help ensure something like this cannot happen again.” The company apologized and agreed to cooperate fully.

The Commission’s actions on Wednesday have wide ramifications for other companies operating in Europe. Almunia’s office is in negotiations with Google (NASDAQ:GOOG) over the company’s dominance of the Internet search and advertising markets. However, according the New York Times, Almunia said that there was no direct link with his decision to charge Microsoft.

Don’t Miss: Is Yahoo! a Compelling Buy After Earnings?