Microsoft Corporation (NASDAQ:MSFT) – a top stock play among hedge funds we track – apparently reneged on a promise to fix an antitrust issue, and European Union regulators don’t take too well to promises being broken. So the EU put a value on a broken promise, and handed down a stiff sanction to Redmond and a warning shot to other companies that the EU is investigating or may investigate in the future.
With this latest sanction, totaling $731 million, Microsoft Corporation (NASDAQ:MSFT) is now the most-sanctioned single company by the EU for antitrust violations over the last decade (about $2.8 billion). The latest sanction stems from a past order from EU regulators to have Microsoft provide users a choice of web browser to use, instead of defaulting to Redmond’s own Internet Explorer browser. Microsoft made a “legally binding” promise to correct the issue and provide alternative browsers on its Windows platform, but a later investigation revealed that Microsoft did not honor its obligation with software sent out for more than a year ending in July 2012. That affected an estimated 15 million users.
“If companies agree to offer commitments which then become legally binding, they must do what they have committed to do or face the consequences,” said EU competition commissioner Joaquin Almunia at a presser announcing the sanction. “I hope this decision will make companies think twice before they even think of intentionally breaching their obligations or even of neglecting their duty to ensure strict compliance.”
In response, Microsoft Corporation (NASDAQ:MSFT) wrote in a statement, “We have apologized for it. We provided the Commission with a complete and candid assessment of the situation, and we have taken steps to strengthen our software development and other processes to help avoid this mistake – or anything similar – in the future.”
Microsoft first encountered the EU’s sanction wrath in 2004 for having a default Windows Media Player tied directly with its Windows software and not giving users an option of other media-streaming software.
What do you think about this sanction? How do you think this will affect Microsoft Corporation (NASDAQ:MSFT)? Give us your thoughts in the comments section below.
DISCLOSURE: I own no positions in any stocks mentioned.
Please see these related MSFT articles: