(Washington, D.C.) – Citizens Against Government Waste (CAGW) today denounced the European Commission’s (EC) continued offensive against Microsoft as the company was hit with an unprecedented fine of $280.5 million euros ($357 million), or $1.5 million euros per day, retroactive to December 15, 2005.  The EC is alleging that Microsoft did not disclose and document Windows Server technology to rival companies.  The fine was issued despite an agreed-upon deadline of July 18 for the company to submit its final release of information.

“The EC’s ongoing attack on Microsoft is yet another example of forcing a successful corporation to help its competitors who can’t succeed in the marketplace on their own,” CAGW President Tom Schatz said.  “Today’s fine also demonstrates how the EC is skewering the marketplace with burdensome regulations, hurting taxpayers with costly litigation, stifling innovation, and threatening intellectual property rights.”

In March 2004, the EC issued a decision requiring Microsoft to hand over valuable intellectual property to its competitors, unbundle its software, and pay a $613 million fine.  Although the European Court of First Instance recognized that the merits of the case favored Microsoft, the company was still forced to comply with the EC’s order by creating two versions of the Windows operating systems, one with its music and video player program, Media Player, and one without.  Microsoft also released server system code to competitors.  Competitors hoping to gain from the prosecution of Microsoft have complained that the unbundled version of Windows has technical problems that make it less functional when used with other players.  But Microsoft had predicted that stripping Media Player files from its operating system to conform with EC directives would cause problems for rival players.

In fact, the failure of this technology by government design is best illustrated by the dismal sales figures of the non-Media Player operating system (XP-N).  Total sales of XP-N were about 1,700 last year; no original equipment manufacturers ordered a single copy.  Sales of the full Windows operating system in Europe were approximately 30 million.  Market penetration of the EC-ordered XP-N version: .0057 percent.  When governments decide what people should buy, the products don’t sell.

In October 2005, Microsoft came to an agreement with its last big competitor in the EC antitrust case.  The arrangement included a $460 million cash payment to RealNetworks, greater access to some Windows Media technologies, and an end to all of their antitrust disputes worldwide.  But the EC carries on despite this settlement.

“In the U.S., the courts reached a fair agreement with Microsoft that did not set overbearing restrictions on future technology or force the company to give away its intellectual property,” Schatz continued.  “The protection of intellectual property rights has become increasingly more important to our long-term prosperity.  In the EU, the right to benefit from one’s innovations has been in jeopardy for some time and now the basic underpinning of American innovation is under attack by European technocrats.  The EC’s actions will have global ramifications for the economy and for taxpayers.”

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.