Microsoft sued over browser miscue that led to $731 mln EU fine

SEATTLE Mon Apr 14, 2014 3:17pm IST

The Microsoft logo is seen at their offices in Bucharest March 20, 2013. REUTERS/Bogdan Cristel/Files

The Microsoft logo is seen at their offices in Bucharest March 20, 2013.

Credit: Reuters/Bogdan Cristel/Files

Related Topics

Stocks

   

SEATTLE (Reuters) - Microsoft Corp's (MSFT.O) board faces a lawsuit over the way it handled an error with its Internet Explorer browser that ended up costing the company a record-breaking $731 million fine by European antitrust regulators.

The lawsuit, brought by shareholder Kim Barovic in federal court in Seattle on Friday, charges that directors and executives, including founder Bill Gates and former Chief Executive Officer Steve Ballmer, failed to manage the company properly and that the board's investigation was insufficient into how the miscue occurred.

The legal action is the first to emerge from a humiliating episode for Microsoft, which the software company has never fully explained and has accounted for only as a "technical error."

In March last year, the European Union levied its largest ever antitrust fine against Microsoft for breaking a legally binding commitment made in 2009 to ensure that consumers in Europe had a choice of how they access the internet, rather than defaulting to Microsoft's Internet Explorer browser.

Its investigation found that updated software issued between May 2011 and July 2012 meant that 15 million users were not given a choice. It was the first time the European Commission, the EU's antitrust authority, handed down a fine to a company for failing to meet its obligations.

In her lawsuit, Barovic says she asked Microsoft's board to fully investigate how that mistake occurred and to take action against any directors or executives that had not performed their duties. She says Microsoft replied that it found no evidence of a breach of fiduciary duty by any current or former executives or directors.

In a statement on Friday, Microsoft repeated that stance.

"Ms. Barovic asked the board to investigate her demand and bring a lawsuit against the board and company executives," said an emailed statement from Microsoft. "The board thoroughly considered her demand as she requested and found no basis for such a suit."

The problem on European computers prevented the so-called "ballot" screen from appearing. Sources close to the company have said it was connected to updated Windows 7 software.

Ballmer, who was CEO at the time, and Steven Sinofsky, then the head of the Windows unit, both had their bonuses cut in 2012 after the error came to light.

The case is Barovic v Ballmer et al in U.S. District Court, Western District of Washington, No. 14-00540

(Reporting by Bill Rigby; Editing by Grant McCool)

FILED UNDER:

Tech Wrap

Reuters Showcase

Reuters Poll

Reuters Poll

Oil price will average less in 2015 than during financial crisis - Reuters Poll.  Full Article 

Stake Sale

Stake Sale

Strong demand for Coal India boosts privatisation drive.  Full Article 

New Italy President

New Italy President

Italy elects senior judge Sergio Mattarella as president.  Full Article 

Pharma Deal

Pharma Deal

Sun Pharmaceutical wins U.S. approval to buy Ranbaxy  Full Article 

SpiceJet Bailout

SpiceJet Bailout

SpiceJet board approves up to $243 mln share sale plan  Full Article 

AirAsia Jet Crash

AirAsia Jet Crash

AirAsia captain left seat before jet lost control - sources  Full Article 

India Art Fair

India Art Fair

Art fair turns India's capital into art hub.  Full Article 

Movie Review

Movie Review

"Rahasya" is an ode to Agatha Christie.  Full Article 

Review: Hawaizaada

Review: Hawaizaada

Movie Review: Hawaizaada  Full Article | Related Story 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage