Users call on OFT to halt Microsoft

Microsoft users must take complaints over its new licensing regime to the Government if they want force a climb-down on the...

Microsoft users must take complaints over its new licensing regime to the Government if they want force a climb-down on the issue, IT leaders and legal experts have warned.

Corporate IT user group The Infrastructure Forum (Tif) this week called on the Government to investigate whether the software giant's new terms, which come into force in a few days, amount to an abuse of its dominance.

Tif said its members - which include FTSE 500 companies such as BP, Shell, and the Royal Bank of Scotland - could pay an extra £880m over a typical four-year investment cycle under the new pricing policy. "Our members have been loyal Microsoft customers for many years and they are furious," said David Roberts, Tif chief executive. "For our members and all UK businesses, there are no immediate alternatives to using Microsoft software, and the company knows it."

The software giant is changing the way it licenses its software from 1 October, scrapping its discounted upgrade programmes, which could result in costs doubling, experts say. Microsoft is also introducing new subscription-based volume licensing agreements which could lead to higher costs for companies with upgrade cycles of over three years.

In a letter to Patricia Hewitt, Secretary of State for Trade & Industry, Tif requested the Office of Fair Trading (OFT) investigate whether Microsoft's actions constitute an abuse of monopoly power under the terms of the Competition Act 1998.

The Department of Trade & Industry said Hewitt was considering the complaint and may refer it to competition authorities.

A legal expert said the chances of Tif succeeding would be greatly increased if other organisations sent information to the Government. "It would helpful for more people to complain," said David Strang, commercial and IT lawyer at Barlow, Lyde and Gilbert. "The OFT needs as much information as possible with regard to costs - who is paying more and by how much."

Other user bodies would back complaints to the competition watchdog. "There are serious grounds for complaint and we would back any organisation that wanted to do so," said David Rippon, chairman of the BCS's Elite group of IT directors. "However, someone has got to stick their head above the parapet and make the first complaint."

The Society of IT Management said it supported Elite's aims. The local authority IT user group's members have estimated that they will have to pay an extra £50m to £80m as a result of the licensing changes.

The Competition Act 1998 states that "directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions" is an abuse of market dominance.

The OFT has the power to stop Microsoft implementing the licensing changes, pending any investigation, but only if companies would suffer irreparable damage as a result of the increased costs. Businesses would also need to prove that increased costs were long-term. The OFT could fine Microsoft 10% of its UK turnover.

Duncan Reid, UK licensing manager for Microsoft, said he was "surprised and disappointed" at Tif's action. Reid said when Microsoft took companies through the options, some realised costs were not as high as they first estimated.

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