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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2647

Sudden Escalation of Browser Wars and Microsoft’s Hefty Fine

Hemantha Abeywardena writes from London…

Microsoft, the world’s largest software manufacturer, was handed down a hefty fine by the European Union on Wednesday, for its inability to give its users in the European Union the choice of choosing the web browser.

The fine, even by Microsoft standard, was colossal and unprecedented - $733 million.

Microsoft used to give its users the opportunity to choose the web browser, when they installed Windows 7 operating system, in line with an agreement reached with the European Union in 2011. According to European Commission, however, between May 2011 and July 2012, over 15 million EU customers were not given that opportunity, owing to what Microsoft classified as a ‘technical glitch’ made by its software engineering team.

Whether the glitch is technical or not, Microsoft has been forced to pay a heavy price, especially at a time when the software giant is worried about its flow of revenue. Microsoft, perhaps not to antagonize the EU any more, made it clear that it wouldn’t appeal against the fine.

A spokesman for Opera, the company which had taken up the issue with European Commission, meanwhile didn’t hide the feeling of being elated: “Opera is happy to see that the Commission is enforcing compliance with the commitment, which is critical to ensuring a genuine choice among web browsers for consumers.”

Opera, the web browser with the least share of browser usage, appears to be considering the fine imposed on Microsoft as a significant turning point in its ambition become a big player in the realm of web browsers.

By imposing the fine, Joaquin Almunia, the top regulator of the European Commission, did his maths to justify the fine: “The fine reflected the size of the violation and the length of time it went on for.” Anyone who reads between the lines knows that the regulator wanted to kill two birds with a single stone; it wants to take the very opportunity to send a signal to other companies, not necessarily in the software development field, against non-compliance with agreement reached with the European Commission.

The ruling has not gone down very with the Americans, though. Most Americans think the fine was too heavy and resonates more with the divisive politics across the Atlantic than technical deprivation of some European citizens. In this context, it has all the sentimental gradients to trigger off a mini-trade war – and when the time is ripe. In Britain, the public has not forgotten the way British Petroleum, the oil giant, got into trouble in the US after a major oil spill in 2011.

The European Commission acknowledged that it had been naïve at the beginning of this issue: it let Microsoft supervise itself by giving it the opportunity to give users the choice, when they install the Windows 7 operating system. Microsoft did it for a couple of months until the ‘technical glitch’ stopped the procedure abruptly – and for well over a year.

Microsoft’s defence puts the company in another cumbersome position - in the eyes of its shareholders. If it was due to a technical glitch, surely, there must be some individuals who are responsible for it. Will the heads roll then?

As for the European Commission, it is not clear whether every single individual of the 15-million-users affected by the ‘technical glitch’, would get his or her fair share of the ‘deal’, i.e. 733/15 = $48.87 per user. If it was feasible and realistic, each user would be able to elevate their Windows operating system to Windows 8, by cashing in on Microsoft’s generosity to promote its latest software product.

The European Commission, however, should not underestimate the number of people, even in Europe, who have some sympathy towards Microsoft. They hold the view that a significant number of 15 million users that the European Commission identified as victims of a ‘technical glitch’, are well aware of the existence of other browsers and hassle-free download options available, if they really want to embrace them.

Analysts think Microsoft got away with the fine, because the normal amount usually could have been 10% of its annual global revenue. The regulators have shown some leniency over Microsoft’s cooperation during the investigation.

The fine certainly must have given an additional headache to Steve Ballmer, the CEO of Microsoft. He lost substantial part of the annual bonus last year over a similar issue involving Windows 8 operating system.
The issues, which were raised against Mr Ballmer by Microsoft board in 2012, were a decline in the Windows division, slow growth in online businesses and the failure of the Windows division to offer European users a choice of which Web browser to use.

The latest debacle, along with no improvement on the other two fronts, has the potential to make the seat of the CEO too hot to sit in for a long time, even if the gentleman in question has well-formed posterior as a feeble compensation for the rapidly-receding hairline.

- Asian Tribune -

Sudden Escalation of Browser Wars and Microsoft’s Hefty Fine
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