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Users Sue Microsoft for Anticompetitive Practices

California plaintiff says Microsoft bundling forces double purchases of apps.

By Peggy Watt, PCWorld   

Antitrust attorneys filed a complaint in San Francisco Superior Court late Thursday. There was a similar filing in Texas and two in Washington, D.C.

The California complaint is filed against only Microsoft by a San Jose computer user on behalf of many unwilling Microsoft customers. He contends Microsoft engages in illegal anticompetitive practices and has restricted trade in software markets, preventing competitive prices and consumer choice in products--specifically the operating system, word processing software, and spreadsheet software.

The suit seeks unspecified damages and an injunction restricting Microsoft's actions.

Right Time

Four law firms are handling the related actions, says attorney Eugene Crew of Townsend, Townsend and Crew, in San Francisco, who filed the California complaint. One of the other cases is also against Compaq, Dell, and Packard Bell NEC, Microsoft partners that preload its Windows operating system and application software onto their PCs.

"The time is right," for the action, says Crew, an antitrust attorney who was asked by the other firms to provide California-based expertise in the effort. "It's something that needs to be done."

The plaintiff in the California case is Charles Lingo, who complains that he had to pay for two operating systems: The one he uses, and Microsoft Windows, which he didn't want but which came preloaded on his computer. Lingo referred all inquiries to his attorneys.

The next step is establishing Lingo's complaint as a class action, Crew says. He expects that within a few weeks, attorneys will get the court to certify the case as a class action.

Cites Feds' Case

The filing cites the U.S. Department of Justice antitrust suit against Microsoft, which is currently in trial, and makes many of the same complaints. For example, the suit alleges that Microsoft tried to restrict competition among operating systems; tried to stifle innovation of such new technologies as Internet browsers and Java; and entered into exclusionary, allegedly anticompetitive agreements with partners such as Internet service providers.

The new lawsuit cites testimony from that trial, including complaints by computer manufacturers that they must install Windows on computers because there is no commercially viable operating system alternative. (California has joined with 18 other states and the District of Columbia in the Justice Department action.)

The lawsuit also cites a study released by the Consumer Federation of America that concluded that Microsoft charges monopoly prices for its software.

It accuses Microsoft of "forcibly" enlisting vendors to limit competition among applications by threatening to stop licensing Windows or upgrades to them.

Also, Microsoft's licensing arrangements with PC vendors bundle Microsoft Word and Excel applications with Windows operating software, the lawsuit alleges.

"In essence, Microsoft has accomplished this bundling by price discriminating in two ways: It has offered and given price reductions to sellers of personal computers for Windows operating software in exchange for their bundled purchase of Word and Excel software," the lawsuit alleges. "On other occasions, to pick up Word and Excel market share early in the class damage period, it has charged little or nothing for Word or Excel, so long as Word or Excel were bundled with Windows operating software.

Microsoft representative Tom Pilla said the company had no comment because it had not yet reviewed the lawsuit.

--Elinor Mills of IDG News Service contributed to this report.