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Microsoft shareholder sues company over EU regulatory failings

Shareholder Kim Barovic says that former Microsoft CEOs Bill Gates and Steve Ballmer failed to properly manage the company

This may be a problem that even Clippy the Office Assistant can’t help: Microsoft is being sued by a shareholder for failing to implement a “browser choice screen” into Windows as required by European Union regulators.

In the lawsuit, shareholder Kim Barovic says that former Microsoft CEOs Bill Gates and Steve Ballmer failed to properly manage the company, ignoring past promises and regulator rulings. Barovic also claims that the board’s investigation into the issue was insufficient.

Microsoft pledged to institute the screen in 2009, but a European Union investigation between May 2011 and July 2012 found that as many as 15 million users were not given a browser choice. This resulted in a fine of €561 million (U.S. $732 million), the first time the European Commission handed down a fine for a company failing to meet its obligations.

Barovic claims she asked the board to fully investigate the issue and take action against any director or executive that did not perform their duties. However, the board only explained the miscue as a “technical error” and did not find any director or executive responsible. Then-CEO Ballmer and Steven Sinofsky, head of the Windows unit, both had their 2012 bonuses cut as a result of the issue.

In response to the suit, Microsoft repeated its earlier stance, saying in a statement to PC Pro, “Ms. Barovic asked the board to investigate her demand and bring a lawsuit against the board and company executives. The board thoroughly considered her demand as she requested and found no basis for such a suit.”

Microsoft has had both ups and downs in the legal market in recent days, leading to some conflicting views on its performance. The company’s cloud solutions, including Microsoft Azure, Office 365, Microsoft Dynamics CRM and Windows Intune, were recently lauded for achieving high levels of privacy and security. However, the company’s acquisition of Nokia, which was expected to give Microsoft more clout in the mobile space, has hit a snag in Asia over antitrust concerns.


For more on Microsoft in legal news, check out these recent InsideCounsel articles:

Microsoft, Sony invest in Intellectual Ventures

Microsoft lauded for privacy, security in the cloud

Asian regulator delays Microsoft acquisition of Nokia devices unit

Surface indicia, trademarks, and design patents — Oh my!

Assistant Editor

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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