WASHINGTON — Microsoft Corp. didn't become one of the world's most powerful companies by backing down from fights. But when Europe's second-highest court denied the software giant's appeal of an antitrust case there last month, Chief Executive Steve Ballmer decided it was time to give up.
Microsoft on Monday bowed to European regulators after a nine-year battle, agreeing to overhaul its business practices.
The move demonstrates Europe's growing role as the world's antitrust police and places pressure on other giant American corporations doing business overseas to appease the region's competition chiefs.
But it also showed Microsoft's desire to swallow its pride and finally put the matter behind it. With competitors such as Google Inc. gaining strength, the world's largest software maker decided to fight today's battles rather than yesteryear's.
The Redmond, Wash., company had been hit with a record $605-million fine in 2004, then an additional $351 million in 2006 for failure to comply, and it has since been threatened by penalties of as much as $4.2 million a day.
European regulators were eating Ballmer's lunch. So he went out to dinner to make up.
He and Europe's competition commissioner, Neelie Kroes, met discreetly at a small restaurant near her Dutch hometown of Rotterdam early this month (she paid). Over the last few weeks, they have been in almost daily contact, she said.
After nearly a decade fighting the EU, Ballmer agreed to drop Microsoft's appeal and make some of the company's highly guarded software code available at low prices. That lets developers better design products that work with the nearly ubiquitous Windows operating system.
"This is protecting the consumer and stimulating competition," Kroes said in Brussels. "We have to take into account that there should be a fair and level playing field whatever the size, whatever the nationality of those companies are."
Microsoft shares gained 34 cents, or 1.1%, to $30.51.
The case highlighted the clout of European Union regulators, who are taking on major American companies even as the Bush administration shies away.
The contrast has been underscored by the U.S. Federal Trade Commission's refusal to start a formal antitrust investigation of Intel Corp.'s business practices, despite pressure from Congress and its rivals.
