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Microsoft Blames Anti-trust Legal Fees for Price Increases
jm.one writes "BBC news has an article about the Californian anti-trust case and points out that Microsoft tells users would suffer from this: 'Somebody ends up paying for this,' said Microsoft attorney Robert Rosenfeld. 'These large fee awards get passed on to consumers.'
Do they really understand why there are laws?"
I remember when MS got slapped with that fine. People said, "Eh.. it's no big deal to them to begin with, but with what they lost, they'll gain back with a simple price adjustment."
So basically they still haven't learned their lesson. Cost of doing business.
We have secretly replaced these Slashdot mods' sense of humor with a rusty nail. Let's see if they notice!!
With a bit of luck, this will come back to bite them in the gonads.
price increases steadily, security holes found repeatedly, consumer's irritation growing until they say "Well you know what Billy boy, up yours, we're switching to linux (or OS X)"
I just hope there's a viable simple alternative by then to which the customers can switch.
This is the sig that says NI (again)
This is a good thing.
-WolfWithoutAClause
"Gravity is only a theory, not a fact!"I gotta buy some of their stock one of these days... it's not that I believe in the concept or think it's right... it's just working for them so well!
Agile Artisans
Im getting SO tired of us paying for their mistakes? There outta be a law to prevent companies making people pay for them getting pasted with fines due to their own law breaking policies ...
hey mr. policeman.. you better not give me that speeding fine.. or else.. somebodies bank will get robbed.. you know, somebody ends up paying for this.
Only morons moderate based on a sig.
Lord knows they can't afford to take the legal fees out of a measly 500% profit margin or the big stockpile of cash they are sitting on.
It may sound "unfair," that Microsoft is somehow getting out of paying for its actions, but all expenses paid by all businesses for all reasons are always passed on to customers.
"Mr Crew has billed Microsoft just over $3,000 an hour for his own work, as well as more than $2,000 an hour for other lawyers on his team. " What lawyer is worth even $200/hr (more on par on normal) much less several thousand dollars per hour. Cause I'm sure no one else could have done Mr. Crew's job just as well for less. definately something wrong if that was approved for lawyer fees after Microsoft lost. (but hey who didn't know that there was something wrong with the legal system in the States)
the company should pay the price of the fines, it should not be turned back to the customers. maybe a price increase is just what's needed to get those thinking about other options to just go out and implement them sooner. sounds like a pretty pathetic plan to me.
this is just the cost of doing questionable business, and it's not like they can even begin to say 'we didn't know we couldn't do that'. it's just fucking rediculous what these asshats are trying to get away with.
Creationists are a lot like zombies. Slow, but powerful and numerous. And they all want to eat our brains.
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Erick
http://www.busyweather.com/
Allright, now I realize you all like to bash MS as much as possible, but from the article: Mr Crew has billed Microsoft just over $3,000 an hour for his own work, as well as more than $2,000 an hour for other lawyers on his team.
Jesus! I'd object to having to pay that as well.
Wouldn't it be nice if all that money went towards, you know, the users that were "harmed" instead of to the lawyers?
RTFA people. Microsoft isn't complaining about the fines (or settlements) here. They're complaining about the plaintiff's legal fees (which they're being required to pay).
And, quite frankly, I think they have a point. The lawyer who lead the class action lawsuit may be a really good lawyer, but I don't think his time is worth over $3000 per hour.
Tarsnap: Online backups for the truly paranoid
Users get $10 coupon on newest version of windows.
Newest version of windows price increases due to litigation by $40.
Two years later, court says "no no no", consumrs get $15 coupon towards new windows.
They don't get it. The fine is because they over charged people.. They're not allowed to "make it up". They are supposed to distribute that 50bln their hoarding back to the people the stole it from.
Open Source Java DAO Generator
OK, Microsoft says its legal bill is too high, so it has to overcharge its customers. But why did it get that legal bill in the first place? From the article:
"The legal costs are part of Microsoft's settlement for over-charging consumers buying its software in California."
Sigh...
"Backups are for wimps. Real men upload their data to an FTP site and have everyone else mirror it." -- Linus Torvalds
One of the unique aspects of a monopoly is the inelasticity of demand on the price of their products. In other words, MS can change the price of their products and, since they have a monopoly, roughly the same quantity of their products will be consumed. Of course, this is not black and white. They cannot make their products 100 times more and expect the same amount to be consumed (though, I know of some MS shops that would have no choice . . .). However, they can raise their prices much more than probably any other company without having a significant amount of revenue decrease.
This means that additional costs to Windows can pretty much be passed 100% down to the consumer, and the EU's monetary penalty is really just another form of tax on the consumer. Perhaps we could call it an "excise" tax on windows.
No, the real way to punish MS is to break up the monopoly and introduce competition, then charge a monetary penalty that cannot simply be passed on to the consumer, because if the new MS enitity/entities were to raise their price so many people would buy the competitions' products that MS would actually experience a decrease in revenue.
Sdelat' Ameriku velikoy Snova!
..should be able to see through that argument. They took monopoly profits before, they take monopoly profits now. Sunk costs like legal bills have absolutely no effect on the optimal price/quantity point. It only comes into play if there's competition.
This is simply trying to shift the blame of why they're extracting monopoly profits: "Damn M$, stop bleeding us dry" to "Damn justice department, stop suing them so we don't pay the bill". When in reality, they would have taken that money anyway, because they can.
Kjella
Live today, because you never know what tomorrow brings
I'm amused at the outraged postings of people shocked by the fact that Microsoft passes along settlement costs to the consumer through price increases rather than cutting into their profits. Look, they'll raise their prices first, and if demand drops off or they're afraid that their market share is shrinking, then they may lower their prices again.
Litigation resulting in cash penalities are the easiest for corporations like MS to handle. I believe that state and foreign governments sue not for whats "right" or "fair" but because its a backdoor method of taxing the public.
IMHO, the best solution to deal with MS was the original penalty of splitting the OS and Apps segments of MS into two separate entities. You can't pass that along to consumers. No wonder MS fought so hard to get that reversed.
BTW - Here's another little fact. Corporations don't pay taxes (technically) either. So before getting all huffy that MS is getting away with it again, take a good hard look at the runaway litigation in the world and ask yourself where all of the money is going!
They have every right to adjust their prices to reflect these additional costs.
Actually, no, they do not. This is yet another example of them abusing their monopoly position within the marketplace. That's what all of the legal action has been about.
This whole idea reminds me of something I see all of the time -- people supporting a government program, but not realzing that someone has to pay for it. For example, here in Florida, voters a few years ago backed a bullet-train overwhelmingly, not realizing that the money for such a train had to come from somewhere. We enjoy no income tax here, so it comes in the form of higher sales or property taxes, which affect us all.
On the same vain, everyone cheers when Microsoft gets whacked with a big judgement or settlement. But, the money has to come from somewhere -- and it will likely come in the form of higher prices. And since 90% of desktops run Windows, it will likely affect you in some manner down the road.
With that said, the attorney's fees in this case (and many others) are outrageous. The judge for set them more modestly.
Jason
This is an example of how fucked up our laws are requarding businesses. This isn't a Microsoft is evil example this is a basic corporate fact and is an example why corporations exist. Corporations are by design intended to protect individuals(the owners ) because the only thing you can do to a corporation is take it's money and as it job is to make money it will simply treat such an event as a loss of profit and it will react as such. If other operating costs go up then that would effect the price too. The only way you are going to change corporate behavior is by holding those in charge responsible for it's acts not the corporation. Except for a corporate charter many actions could be tried under conspiracy or even racketeering laws but that corporate charter insulates the owners from that. Change incorporation laws and this would stop.
Slashdot, home of supporters of free software, free music, and free speech.Except for Moderators that disagree with you.
... they would push to make sure the majority of the "benefit" would go back to end users. But that wouldn't serve their purpose. After reading the article and a million different posts... they're just angry about having to pay their opponents' lawyer's fees. Hey, I would be too.
Not that I care for MS or their tactics, but isn't it a bit sad? If there are 13 million Californians who are going to recieve the benefit, a $10 coupon would not cut it. That gives you $130 million to the end users and $260 to the prosecuting lawyers. Looks like they'd have to double it... the saddest thing is that the big winners in all this are the lawyers and not the people.
FLR
It seems like a lot of people here think that passing along the expense to the user is unfair. These are the same people that are proponents of Linux. Do the math ... Windows costing more means that there will likely be fewer users of Windows because they can't afford it in their or their company's budget. Anyone that pushes Linux over Windows should be HAPPY that the cost is being passed onto the users.
Linux has made great strides in usability...but its got a way to go. Why did I just need to recompile my madwifi drivers with my kernel update? Why does Fedora's kudzu insist all ethernet interfaces start with "eth" (madwifi uses "ath")?
*I* know the "whys" for all this because I've been using Linux for years...trying to explain this process to someone less familiar, and they'll think I'm nuts for going through this process when my Windows XP setup "just works".
Linux is fine to use, until something goes wrong.. wireless is unfortunately a good example of this. I know two people who were trying to install wireless drivers on their laptops. Both drivers needed kernel headers. One required some very strange methods in order to make it work, and I had to MODIFY THE BLOODY SOURCE CODE to get the other to compile. Unfortunately, most end-users do not know, or care about GNU Make and GCC.
if any law infractions revolved around named human beings, and not this non person person they call a corporation. If we re adjusted the laws back to named humans are responsible for their actions, and if the fines came out of personal bank accounts of whomever issued the orders that resulted in the crimes committed, you'd see a lot more honesty with companies. And the government could mandate a price freeze as well on their products to go in conjunction with any fines, or they could actually institute a "three strikes and you are out" provision like they have with human beings, and in the case of corporations, just completely revoke their charters after a third conviction. But they don't do that too often, companies are allowed crime after crime after crime after crime, yet they still stay "in business".
You make Bill Gates pay a big chunk out of his pocket, then make him do 500 hours community service picking up trash next to the road,after a few months in lockup, like any regular guy would get for stealing those sorts of sums, you'd see changes in his company's predatory practices, and pronto. You give him a perpetual get out of jail free card, he'll keep using it. It's that simple.
There's a variety of techniques that could be used to make corporations more honest, but bottom line is, nearly all the legislators, judges, and people in the executive branch make the bulk of their money from being stock holders and/or being in ownership or management positions in corporations, they profit handsomely from this corporate insulation, so they will NOT write, vote for, or sign into law anything that could hurt them personally. They keep up the laws that benefit corporations, and they keep up that level of legal armor and shielding that corporations have, that private individuals don't have.
If YOU defraud someone, it comes out of your pocket and you can't "pass it on" as a cost of doing business. If you do it a few times, you will personally go to jail, some times even one time depending on the crime. Pass a bae check over 100$, it's a felony, you could serve time. a corporation defrauds thousands of people out of billions, or puts a competitor out of business using questionalb tacts, those corporate officers hardly ever see any jail time. It happens, but it's extremely rare. Corporations can just keep getting away with it, time after time, and when they are so huge as to be dominant market players, it never results in any significant changes to the corporation, other than they learn to obfuscate the bookeeping better, and THEN they figure out what new laws that would benefit them better, that might keep them from getting caught, etc, that need to be passed, and then they go to work on that with campaign contributions and lobbying, using money they half stole in the first place. It's a corrupt vicious cycle, organized gang activity basically, and gates and company are just one example of many.
The system is so broken and so corrupt there is little hope that it will get fixed any time soon. I doubt it will frankly. And there is so little difference between "government" and really really large international corporations that we should probably just end the illusion that there is.
That out of all of Microsoft's business costs, the only ones "somebody has to pay for" are the legal costs with the government.
For example, wouldn't it make more sense to point at the approximately three hundred million dollars per quarter that Microsoft has been pissing away on the XBox venture since it began with no apparent plan to move to profitability in sight, and say that perhaps that is the cause of the cost increases? Or what about the MSN division, which last I checked has run very slightly profitable for only one quarter (sometime last year) once with only losses for the entire rest of its entire history? Or-- say-- Windows Media Player? Microsoft's giving it away but there's clearly development costs. Doesn't someone have to pay for that?
It seems absolutely bizarre that Microsoft seems to be trying to make the implication that ventures such as the original IE, or Windows Media Player, really are "free", and just attempts to "stay competitive", and the fact they have all this money from their OS and Office divisions doesn't give them any unfair advantage. Yet then once it becomes advantageous from a PR perspective to do so, they begin trumpeting about how all their costs get passed on to consumers. Well, gee! If the costs of doing business are getting passed on to consumers, then aren't the development costs for IE and WMP being passed on to consumers as well? And if IE and WMP are being paid for via costs passed on to the people who buy Windows, then why does Microsoft claim that these are anything other than forced bundling? Why the "it's free" charade that seems to be the basis of their claim that IE and WMP aren't illegally anticompetitive actions?
I'd say the costs passed on to consumers from Microsoft paying slap-on-the-wrist fees for monopolistic practices are dwarfed by the costs passed on to consumers from Microsoft actually engaging in monopolistic practices in the first place.
Irritable, left-wing and possibly humorous bumper stickers and t-shirts
It's a common misunderstanding that costs are always passed on to consumers. Most companies actually sell at whatever price they can get (the price that the market can bear). They then make a profit by having costs that are lower than that, the lower the costs the better the profit. In a competitive market, there is normally a fairly clear price which things can be sold at set by the price the competition is charging.
Where does money for this come from? Simply, existing shareholders in a company which is making less profit get less money.
If a company is a monopoly with a captive market, the calculation is completely different. The question is "what price can we get away with charging without someone stopping us". The idea, in this case, is to try to increase the "percieved value" of the product (so people are willing to pay the price) and to increase the "percieved cost" of the product so that people feel that the cost is justified.
All of this is the reason why the statement from Microsoft is tantamount to and admission of being a monopoly, and further, given that this is a discussion about illegal overcharging, it seems like a clear admission that Microsoft intends to break the law again.
The fact is the MS is in a position that most other corporations would love to be in - not simply just being a monopoly but actually dictating to it's customers whatever it likes, rather than in most other industries when the customer has the power of choice and some influence over product pricing.
Whether this is good for Linux or not is irrelevant - the fact is that the user base MS has is no longer a customer but a dependant in the same way a drug addict needs a dealer - in other words, customers taking some control and forcing MS's hand.
What this needs is a few big MS customers to simply refuse to pay those license fees and to stop upgrades (and no, I'm not talking about just moving to Linux) - then there is some likelihood of vesting power back into the customers' hands such that MS products are bought based on their quality and pricing, rather than just because they are depended on.
It is very dangerous to allow a corporation to have this much influence & power over its customers - if the customers just "lay down and die" now, then this kind of event will happen more frequently as MS gets more confident in its bullying tactics. This will get *much* worse unless people start acting now.
Incidentally, before anyone accuses me of Linux zealotism, my attitude always has been that Linux's continued success should be based on the postivie aspects of delivering what people want rather than MS negativity forcing people to migrate to it.
In this case, migration to Linux is an option but hitting MS in its corporate wallet is what is needed to counter this action - users should just continue using the MS software they have and not upgrade. Corporate users should look at the licenses they have a maybe start cutting back on Office licenses, possibly handing out Open Office to users who don't need the full capabilities of MS Office.
These are actions that can be taken that will not necessarily affect the user environment greatly but that will send a message to MS that the bullying must now stop.
Gentoo Linux - another day, another USE flag.
I might just be "anecdotal evidence", but I really want to be using Linux. I would be doing so right now if I only could. But for some reason, my Mandrake won't boot because of my ATI All-in-Wonder Radeon9800Pro video card (every single setting out of about the 20 possibilities ended with "An error occured, try different settings").
I'd like to buy Lindows (or Linspire, or whatever the name of the day is), but I was wise enough to write to customer support and ask if my hardware was supported (mostly an issue about the video card), and if not, whether they expected to be supporting it soon. The reply I got was "No, we do not support that video card". So now I got a video card worth well over $400 and I should trash it to go back to a crappier card because Linux doesn't support it? Sorry, but I'm gonna stick to WinXP as long as Linux doesn't run on my video card.
You are right about Linux not being hard to *use* anymore, but it is still freakin' hard to *install* and get it running.
After 3 days without programming, life becomes meaningless
- The Tao of Programming
The lesson, if you're not blinded to it, is that you don't need 100% control of something to be an effective monopoly.
Microsoft controlled the OS. If they didn't like you your application would accidently break every time they upgraded the OS. If they decided to compete with you, same thing.
It's like buying every bridge in town (matters more in some towns than others) and claiming that you don't represent a monopoly because you've only got 1/7000th of the road surface in town. Bridges are a bottleneck of driving. Like an OS. Nobody buys a computer for the OS, they buy it to do things, the OS is just like the mechanics of the car - something that makes the car do what you bought it to do.
With Microsoft's control over a large segment of the industry (90%?) they could bully other companies into not writing software for other OSes, or selling computers with other OSes.
In other words, they started to be able to extert non-market pressures. An ideal market has perfect knowledge and perfect availability. Microsoft is trying to remove these as much as possible. They don't want people to know about alternatives, nor be able to use them if they hear about them. If you do buy a competing office suite, which you can't get pre-installed, it'll break when MS "upgrades" something.
A capitalist would embrace the market. They would strive to offer a better service, or a better price, and draw customers voluntarily. Microsoft instead is paying people to mislead you and restrict your choice of competitors. Like bribing the city to rezone your property, or accidently shutting off your electricity, if you dare to compete with them. Or sabotaging their own product (car for instance) when you install a third-party product (stereo) in order to scare everyone away from non-Microsoft add-ons.
You're basically making my point here. Here's what you're suggesting:
I should install/boot in text mode, then figure out a way to get the ATI driver in text mode, install the driver in text mode and "attempt to configure". All that, plus reading a howto document that is 20 pages long.
I don't know about you, but that definately doesn't fall in the "easy-to-use" category for me... what's the point of having a GUI installer if I can't even use it?
After 3 days without programming, life becomes meaningless
- The Tao of Programming
IANAEconomist, but all of the folks saying, "It's econ 101! In competitive industries, companies can't change prices, MS is warning that they're going to change prices, ergo they're a monopoly!" should be aware that economics has retreated from this simple "price setting" == "monopoly" claim since the 1930's. Now, it so happens that microsoft really is a monopoly. However, the fact that there is some elasticity in their pricing doesn't prove it.
By the "economics 101" definition, common sense tells us that very very few modern industries are "competitive," because in almost all real industries, companies have pricing power. E.g., Nike is not a monopoly, but they obviously have a lot of latitude in how they price their shoes.
The classical market model, wherein producers have absolutely no control over the prices of their products, was a great model for the mercantile systems of the 18th and 19th century, when they were developed. If you're a cotton planter, or molasses distributor, or lumber baron, etc. your production accounts for a small enough fraction of available goods that you really can't effect prices at all; you have no choice but to take the going price.
Very few modern industries fit this model, in part because not many modern industries involve true commodities; there's always some difference between McDonald's and Burger King that's important enough to some consumers that they'll pay a bit extra for their favorite. But also because most industries have a few behemoth leaders that are responsible for most of the production. But even for chemically identical commodities like steel and salt, companies end up having pricing power because so few companies account for so much of the production. In the US, if C&H stopped selling sugar, there would be a noticeable "sugar crunch"; this effectively gives C&H an ability to price sugar, since consumers can't credibly threaten to just get all their sugar somewhere else.
(Been reading Galbraith on my AM commute lately. Would genuinely appreciate any real econ types smacking me down.)
Gee, no room in the 80% margin to cover the costs incurred establishing those same margins.
life sucks being them
A company that is convicted of being a monopoly can't be sued into behaving. It has to be dismantled. This is a perfect example of why that's the case.
The fines that are awarded, alternatively, could be secured by seizing the companies assets and either placing them in the public domain, where IP is concerned, or auctioning them to pay some recompense to the people hurt by the company. But even so, if you leave the company intact, it will just do the same thing again. I know of no example of any monopolistic company giving up it's bad behavior if it could continue to break the law and still make a profit.
-All that is gold does not glitter - Tolkien
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