Statement on July 12 Fine Announced by European Commission

REDMOND, Wash. — July 12, 2006 — Microsoft Corp. issued the following statement by General Counsel Brad Smith, following the decision by the European Commission to impose a €280.5 million fine against the company:

“We have great respect for the Commission and this process, but we do not believe any fine, let alone a fine of this magnitude, is appropriate given the lack of clarity in the Commission’s original decision and our good-faith efforts over the past two years. We will ask the European courts to determine whether our compliance efforts have been sufficient and whether the Commission’s unprecedented fine is justified.

Despite these fines, Microsoft remains totally committed to full compliance with the Commission’s 2004 decision. We will continue to do whatever the Commission asks to comply with its decision as these issues are considered by the courts.

The record will show that Microsoft has acted in good faith to comply with the Commission’s decision. We delivered thousands of pages of technical documents from December 2004 onward. When it became clear there were disagreements over the technical documentation requirements, we pressed for greater clarity, we delivered revisions promptly, we offered unlimited technical assistance, and we even made our source code available to competitors in an effort to resolve the impasse.

The real issue here is not about compliance, it is about clarity. Having received a clear definition of the documentation requirements this April, we already have met nearly all those requirements in just three months. We have dedicated massive resources to deliver high-quality documentation according to the aggressive schedule set by the Trustee and the Commission. We have delivered each of the first six milestones on time and have over 300 employees working around the clock to meet the seventh and final delivery date for this project, scheduled for July 24. It is hard to understand why the Commission is imposing this enormous fine when the process is finally working well and the agreed-upon finish line is just days away.

The fine announced today is larger than the fines the Commission has imposed for even the most severe competition law infringements, such as price-fixing cartels. When you consider Microsoft’s massive efforts to comply with this ruling, and the fact that more than a dozen companies are already using similar documentation provided in the U.S. to ship actual products, we do not believe this fine is justified.

In the meantime, we will continue to work with the Trustee on the final steps in the work plan established by the Commission in April. I would like to take this opportunity to thank Professor Barrett and his team for their hard work over the past few months. With them, we have created a highly constructive process that we hope can achieve resolution on the technical documentation, and also help resolve any future issues.”

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