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Europe Hits Microsoft With $731 Million Fine Over Browser Options

Some sloppy coding on an update to Microsoft's Windows 7 two years ago has cost the computer giant a $731 million fine to the European Commission.

Microsoft said Wednesday it would not contest the fine, imposed for what the commission said was the company's abuse of its market dominance to stifle competitors' Web browsers.

It all started in 2009, when Microsoft agreed to pay an 860 million euro fine to the commission and to give Windows users in Europe the option to choose browsers such as Google's Chrome or Mozilla's Firefox, instead of having its own Internet Explorer automatically installed.

But some 15 million Windows 7 installations in Europe failed to include the fix and forced users to install Internet Explorer. Microsoft admitted the failure last year.

Microsoft says when it released Windows 7 Service Pack 1 in February 2011, sloppy coding and testing of the new code meant it failed to trigger the alternate browser option when the system first booted up. The company says it was unaware of the problem until regulators brought it to its attention months later.

"We take full responsibility for the technical error that caused this problem and have apologized for it," a Microsoft spokesman said.

Speaking in Brussels at a news conference Wednesday, the EC's top competition regulator, Joaquin Almunia, said that the fine reflected the size of the violation and the length of time it went on for, according to The Associated Press:

"Almunia said it was also intended to make an example of Microsoft and deter other companies from doing same thing. In theory, the commission could have fined Microsoft up to 10 percent of its global annual sales during the period the violation took place.

" 'A failure to comply is a very serious infringement that must be sanctioned accordingly,' Almunia said."

The Telegraph of London says Microsoft expected the fine and cut bonuses for CEO Steve Ballmer accordingly last year.

"However, the firm had privately hoped the final figure would be lower than [$731 million] because its strength in the Web browser market is radically diminished compared to when it committed to offering a choice," The Telegraph said.

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