Iowa Court May Order Microsoft Refunds

dowobeha writes: "The Des Moines Register is reporting that thousands of Windows 98 users in Iowa could get $40 refunds from Microsoft. The Iowa Supreme Court has found the big boys from Redmond guilty of price fixing in violation of a 1976 Iowa law. According to the report, this is the first antitrust ruling in any state that favors 'indirect purchasers' (regular consumers who got Windows preinstalled on their newly purchased computer) rather than "direct purchasers" (manufacturers who license Windows to distribute on new machines)."

Comments

Re:Consumers, not states, brought the case

[Clay Mitchell]

Hey, this is good! Instead of the the big corporations petitioning the government to screw Joe Citizen, Joe Citizen petitions the government to hose the corporation! I like this!

But there's a good lesson here, don't sit back and take it - it's easy to sit around and think academically "oh my, they certainly can't take away this! It's guaranteed in the bill of rights!" but who actually gets out there and tries to stop it?

capitolism is all about screwing people anyway...

[dryueh]

Microsoft responded that the Iowa lawsuit went against federal law, which says only "direct purchasers," such as computer makers who buy Windows 98 from Microsoft, can recover damages for antitrust violations.

Hmph...and then I guess it's up to these **direct purchasers** to ensure that the money trickles down to the consumers that are immediately affected by the anti-trust violations. Shows you were everyone's priorities lie, hm?

Re:Of course...

[mapinguari]

The article states that there's potentially tens of thousands of consumers who might be eligible for the $40 refund. Of course that's only a few million dollars. Mere noise to a company with $38 billion in cash reserves. So it's not the financial impact, but the precedent the case sets.

Re:um, yeah, but...

[bberg]

I'm no lawyer... but the point of sale was in iowa, so a company would have to follow state laws also. Just becuase they are based out of stated doesn't mean they are above state law when selling to resedents (of course the internet is the big gray area right now). Its like a fast food joint having to follow local health standards even though they are based out of state. (I know there are allot of holes in this analogy, but take it for what it is worth)

The check is not in the mail.

[n0ano]

Assuming that MicroSoft actually winds up owing every one is the class $40, a big if, I wouldn't hold my breath waiting for a check. What do you want to bet that the payout will be in the form of a $40 rebate on your next MS purchase?

I love the US class action legal system. The lawyers get paid big bucks and the consumers wind up funding a new marketing program that locks them in even tighter to the guilty party!

Gleeful BUT

[4of12]

I applaud the notion that a company responsible for price fixing be made to pay for its noncompetitive tactics.

That said, however, I see where this could open up all kinds of cans of worms.

What if it could be shown that the supplier for one part of my Ford Mustang exerted similar tactics and caused the price of some component to be exagerated compared to what a competitive marketplace would support?

Could I get a refund of several dollars from the manufacturer of the power seats?

What about going back two levels of suppliers?

Iowa might be right -- and it might even work -- but on a state by state basis I could see where the feds would get all kinds of complaints from businesses seeking to avoid this kind of potential hassle.

OTOH, if the feds did their job, looking out for development of anti-competitive marketplaces, then we wouldn't be in this mess in the first place. Maybe there's been a de facto rollback of the Sherman anti-trust act that I don't know about.

Good luck!

[polymath69]

Don't count on a check. The article says "refunds or credits". What company ever writes a check when it can simply print the money in the form of a coupon?

That way, they get you coming and going. You paid for the OS you didn't want or need, and you don't intend to buy anything from them in the future anyway, so the coupon will remain unused... Microsoft smiles. The lawyers smile, too, since they got paid. Consumers? Hey, you won, right? Be happy about it.

It wasn't a decision to force a refund

[jmcnamera]

Read the article again, this is the Iowa State Supreme court telling the local court to hear the case.

It wasn't decided if it was anti-trust or that a refund was due. Only that it should be heard.

Re:Oh, man...

[Anonymous Coward]

You mean the guy in AOLTW's pocket? You bet he will attack Microsoft what with AOLTW being a New York company and Microsoft being a Washington based Company.

$40 is insiginficant to M$

[jweb]

According to this the population of Iowa is 2,923,179 residents. Assuming each person has 1 legally-purchased copy of Win98, $40 to each person winds up costing Billy-Boy $116,927,160. Which is approximately 0.29% of M$'s $40 Billion cashpile. A very insignificant amount in the grand scheme of things for Redmond.

How I avoided the Micro$oft Tax

[bnavarro]

I just purchased a Pentium 4 screamer for myself. Since I was converting my old Pentium II compuuter to a Lunx box, I wanted to use the copy of Windows 2000 that I had running on it on my new computer -- I refuse to "upgrade" to XP. I was mindful of getting slapped with the OS tax if I refused a copy of XP. My solution?

I built the damn thing myself.

I bought the motherboard, video card, and case from CompUSA. I bought the memory, hard drive, DVD drive, skipped the floppy drive, Ethernet card, and sound card from a mom and pop computer store.

If you have avoided rolling your own computer, I must report that it was extremely intuitive and easy. If you can build Lego models, you can build your own PC.

Just say no to the MS tax. Build your own computer!

Re:How I avoided the Micro$oft Tax

[Anonymous Coward]

Try putting together a laptop with pieces from different comapnies - and try and get it to be under 1" thick - Have fun!!

Actually, they are.

[Planesdragon]

There's a line in the consitution that requires states to give "due weight" to the legal actions of other states. Ergo, if I'm married/divorced/sued/imprisoned in one state, I can't escape that marriage/divorce/judgement/jail term simply by fleeing the state.

This little bit of the law is why there was all that fuss about Hawaii possibly allowing same-gender marriages a few years back. If they had did it then, then homosexuals could become married *all over the country* by having their marriage in the rather romantic state of Hawaii.

MS can appeal the Iowa decision through Iowa's courts, and then through the federal courts, and they might even file suit in Washington court to block it, but simply being in a different state isn't going to let them get out of whatever Iowa demands.

(And if MS doesn't do anything, they'd get smacked pretty hard. If I filed suit against MS, properly notified them, and they didn't respond, I'd get whatever I could convince the judge was fair for the wrong committed against me.)

Re:Light on details? -- apples to apples please

[Ill_Omen]

(no pun intended)

<blockquote>
According to Outpost.com:

MacOS X 10.1.3 - $129
</blockquote>

That's for the full version of OSX. I couldn't find an upgrade version.

Also according to Outpost.com:

Windows XP Home Upgrade - $99.
Windows XP Pro Upgrade - $199.
Windows XP Home Full Version - $199.
Windows XP Pro Full Version - $299.

Now obviously the big OEMs don't pay that much, but if you're going to compare retail price, at least compare the prices of equivalent products.

I'm really, *really* confused

[gregfortune]

I'm probably going to get modded into oblivion for this, but I really want to know... Why is what Microsoft did considered a bad thing?

When I go to the supermarket I tend to buy the largest package of something that I think my family can consume before it goes bad because prices tend to be better in bulk. I makes a certain amount of sense too. To the producer, a sale of 1 unit package is not worth as much as a packaged sale of 5 units. Of course, this can be messed up, but the general idea still holds.

Also, I tend to work at a lower hourly rate when I know I'm going to get a project that is 3 times larger than a normal project. I do that, of course, because I'm getting more stable work.

So how is Microsoft charging less for bulk purchases somehow wrong?

Re:I'm really, *really* confused

[Jim the Anti-Bob]

This case is not about Microsoft giving price breaks for bulk purchases. The District Court's Findings of Fact speak better than I could about Microsoft's Windows 98 pricing behavior...

as it relates to OEMs: "In a competitive market, one would expect the price of an older operating system to stay the same or decrease upon the release of a newer, more attractive version. Microsoft, however, was only concerned with inducing OEMs to ship Windows 98 in favor of the older version. It is unlikely that Microsoft would have imposed this price increase if it were genuinely concerned that OEMs might shift their business to another vendor of operating systems or hasten the development of viable alternatives to Windows."

as it directly relates to consumers: "A Microsoft study from November 1997 reveals that the company could have charged $49 for an upgrade to Windows 98 -- there is no reason to believe that the $49 price would have been unprofitable -- but the study identifies $89 as the revenue-maximizing price. Microsoft thus opted for the higher price."

This behavior has nothing to do with bulk purchase discounts, but it has everything to do with misuse of monopoly power. That is why the court demonstrated that both resellers and consumer purchasers were harmed by Microsoft's behavior.

Re:Keep your head on your shoulders

[Anonymous Coward]

That is certainly why they do it. But that doesnt make it legal.

This sort of contract is an example of an illegal monopolistic practice.

Because MS is a monoply, it would be almost impossible for a PC vendor to not offer to include Windows for any customer. They could also not be profitable paying MS 'list price', becuase then they would not be able to compete with *their* competitiors. Becuase of that, MS has an almost unlimited power over PC vendors, enough to force them to deny entry to competitors to MS. THATS why its illegal.

It would be legal for MS to require these terms if MS were not a monoploy. And most vendors would turn them down. MS would have to (compete) with the other OS vendors for the OEM's business. That would be a good thing. Those terms are not illegal in and of themselves, they are only illegal whan a company is a monopoly. That is what 'anticompetitive' is all about.

Most people who comment understand this implicitly, so they often leave out the full explanation.

MS practices consist of 'maintaining an illegal trust'

IANAL

They'll probably do what Nintendo did...

[SomeGuyFromCA]

And hand out coupons for $40 off Micros~1 products, such as WinXp, Office XP, DevStudio...