How Will Microsoft PAY For This MISTAKE?

The European Union has opened an investigation into Microsoft (NASDAQ:MSFT) having possibly violated its 2009 order to offer users a choice of web browsers with its operating system. If the company is found guilty, it will be mark the second time it has defied regulators, leading to a severe penalty. Microsoft conceded it had “fallen short” of its obligation to provide the “browser choice screen” that would allow users of the Windows operating systems to select a browser other than Internet Explorer.

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Nearly three years ago, Microsoft had agreed to offer European consumers better access to rival browsers in its Windows software until 2014 in the process of settling an antitrust case. It had also then avoided a penalty, which could have been set at up to 10 percent of the company’s global turnover. However, the company possibly didn’t follow through with the commitment for its Windows 7 operating system, according to EU Competition Commissioner Joaquin Almunia.

“We take compliance with our decisions very seriously,” Almunia told a news conference on Tuesday. “And I trusted the company’s reports were accurate. But it seems that was not the case, so we have immediately taken action. If following our investigation, the infringement is confirmed, Microsoft should expect sanctions.”

The Commission said an approximate 28 million customers in the 27-country European Union were not offered the browser choice from February 2011 until now. Microsoft confirmed that assertion, apologized, and blamed the issue on a technical problem.

“Due to a technical error, we missed delivering the BCS (browser choice screen) software to PCs that came with the service pack 1 update to Windows 7,” it said. “While we have taken immediate steps to remedy this problem, we deeply regret that this error occurred and we apologize for it.”

The company said it had retained outside counsel to conduct a formal investigation of how the technical error occurred and to make suggestions to avoid such problems in the future. It added that it was now distributing software with the browser option and offered to extend the compliance period for an additional 15 months.

Microsoft has had to pay a total of 1.7 billion euros ($2.09 billion) in penalties, including 497 million euros in 2004 for anticompetitive practices and 281 million euros for additional breaches of competition rules.

The Commission is also currently negotiating with Google (NASDAQ:GOOG) to try to settle a case where the company has been accused of using its dominant position in the Internet search and advertising market unfairly.

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