2:40 a.m.: European Competition Commissioner Neelie Kroes just announced a fine against Microsoft of 280.5 million euros, or $357 million, saying that the company has failed to fully comply with the commission's 2004 antitrust ruling. See this news release for more. Here's our initial story on the announcement.

"I sincerely regret that the company has still not put an end to its illegal conduct," Kroes said during a news conference.

At 1.5 million euros a day, counted from Dec. 16 to June 20, the fine is less than the 2 million euros in daily fines that the commission had threatened.
"This fine is a substantial amount of money," Kroes said. "The commission has shown restraint in setting the level of the fine, seeking to do no more than is necessary to induce Microsoft to comply with the decision." She added: "It is a great pity that they didn't do so two years ago."

She said the commission could raise the penalty to 3 million euros a day in the future, but she added that the trustee in the case, Neil Barrett, has seen recent progress in the company's efforts to comply. Microsoft is slated to hold its own conference call later this morning to respond.

Update, 3:15 a.m.: Microsoft says it plans to appeal the ruling. Here's the company's news release. A portion of Microsoft General Counsel Brad Smith's statement from the release:

"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."

Update, 4 a.m.: More from Kroes' earlier remarks:

"Microsoft has told me that they are now devoting substantial resources to complying. It is a great pity that they didn't do so two years ago before there was a threat of fines. If the compliance effort had begun in earnest in March 2004, the burden on Microsoft's staff would have been much lighter. I don't buy Microsoft's line that they didn't know what was being asked of them, because the March 2004 decision is absolutely crystal clear -- they have to provide complete and accurate specifications that will allow the development of interoperable products. In the period covered by today's decision, Microsoft's documentation fell significantly short of this requirement."

Additional coverage: Reuters, Financial Times, Bloomberg News, and AP.

Images from Kroes' news conference in Brussels: Reuters and AP.

Update, 8:15 a.m.: Microsoft has posted a transcript of General Counsel Brad Smith's conference call with reporters.