Microsoft Faces EU Antitrust Probe Over Web-Brower Choice

Microsoft Corp. (MSFT) risks European Union penalties for failing to comply with a settlement to give users a choice of web browsers, more than two years after it tried to end a decade-long clash with antitrust regulators.

EU Competition Commission Joaquin Almunia said Microsoft may have misled regulators by failing to display a browser choice screen to users of the Windows operating system since February 2011. The world’s largest software company blamed a technical error for not showing the screen to some users and offered to extend its commitment until March 2016.

Microsoft has already been fined 1.68 billion euros ($2.06 billion) in EU antitrust probes, including an 899 million-euro penalty for failing to obey an order to share data with competitors. The Redmond, Washington-based company agreed to offer access to rival browsers as a part of a 2009 settlement to repair its relationship with the bloc’s regulators. It told regulators last December that it was complying with its commitments.

“I trusted that the company’s reports were accurate,” EU Competition Commissioner Joaquin Almunia said in an e-mailed statement. “If, following our investigation, the infringement was confirmed, Microsoft should expect sanctions.”

Microsoft said it only learned this month that it didn’t offer its browser choice software to some 28 million computers running Windows 7 Service Pack 1, or 10 percent of the computers that should have received it. It blamed a technical error and said it has already started distributing a fix.

Deep ‘Regret’

“We deeply regret that this error occurred and we apologize for it,” Microsoft said in a statement. “We understand that the commission may decide to impose other sanctions.”

Almunia said he may have to step up how regulators supervise companies’ commitments to end antitrust probes.

Recent binding pledges by Standard & Poor’s (MHP) and Electricite de France SA (EDF) “are particularly complex and require strengthening of our monitoring,” Almunia told reporters in Brussels.

Michael Privitera, a spokesman for Standard & Poor’s in New York, declined to immediately comment. EDF in Paris declined to comment.

Regulators only became aware that Microsoft’s browser choice screens weren’t working when they received complaints, he said, without identifying who had alerted the EU.

The EU’s new probe is a “real surprise, given Microsoft’s long and painful past” with regulators and earlier fines imposed for not complying with the earlier investigation, said Mark Tricker, a lawyer with Norton Rose LLP in Brussels.

Repeat Offenses

Any fines for Microsoft may take into account repeat offenses, Almunia said in a reference to the EU’s 2008 penalty for the company’s failure to obey an earlier EU decision. That ruling ordered it to provide information to software developers to make compatible products. EU antitrust fines are usually capped at 10 percent of yearly revenue.

Under the terms of Microsoft’s 2009 pledge, consumers who buy personal computers were given a choice of the 12 most widely used browsers to install in addition to, or instead of, Microsoft’s Internet Explorer. Microsoft said today that it would extend this browser choice for an extra 15 months, or until March 2016.

After settling with the EU, Microsoft moved to the other side of the fence, filing complaints against Google Inc. (GOOG) and what is now its Motorola Mobility unit for alleged antitrust violations.

Microsoft declined 0.7 percent to $29.25 at 11:21 a.m. in New York.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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