Europe's not finished with Microsoft yet

February 27, 2008: 2:02 PM ET

Heartwarming though it was, last week's declaration of software openness from Microsoft (MSFT) won't end its regulatory troubles. European antitrust watchdogs made that clear Wednesday.

The European Commission fined the software giant a record $1.3 billion, saying the company for three years overcharged competitors for information on how to make products that work with Microsoft's dominant Windows operating system. Microsoft was quick to portray the fine as an echo of the past, noting that regulators have said Microsoft is now living up to its commitments.

But it's not so simple. The fine also shows that European regulators still have a bone to pick with Microsoft, and that could make it tough for the company to take bold steps to acquire competitors and compete with Google (GOOG).

Just look at the commission's official statement about the Microsoft fine. The acrimony is a little obvious. "Microsoft was the first company in 50 years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision," said European Competition Commissioner Neelie Kroes. "I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance."

In other words, they trust Microsoft about as far as they can throw Steve Ballmer.

Indeed, there are plenty more opportunities for Microsoft to clash with Europe. Regulators are formally investigating antitrust claims that Microsoft doesn't give competitors enough information to link their programs to dominant Microsoft offerings such as Office, and that Microsoft inappropriately bundles Internet Explorer with Windows, harming competitors like the Opera browser (which, notably, is made by a Norwegian company).

And, of course, there's Microsoft's attempt to buy Yahoo (YHOO) for more than $40 billion, which is all but certain to raise antitrust hackles in Europe. "The EU has obviously demonstrated a clear, continuing concern about Microsoft," Randal C. Picker, an antitrust law professor at the University of Chicago, said in a recent interview. "I think they still regard Microsoft as being a behemoth."

A behemoth that, from Europe's perspective, needs to be on a short leash.

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