Microsoft faces another lawsuit over software licensing practices

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Microsoft is facing one of the UK's largest ever class action lawsuits over its software licensing practices.

In a claim estimated at billions of pounds in total, barrister Alexander Wolfson said the company has been overcharging customers for certain products, including its Office and Windows product lines, since October 2015.

The lawsuit alleges that the tech giant restricted competition to new licenses from pre-owned licenses for Microsoft products, which had the effect of inflating the prices of both.

Wolfson, the proposed class representative for the action, claims this represented an abuse of its market dominance.

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"Microsoft’s actions have had a significant and far-reaching impact on UK consumers, businesses and public bodies," said Wolfson.

"This claim seeks to hold Microsoft to account and to secure compensation for the many affected members of the class. With billions of pounds potentially at stake, this case is about ensuring fairness in the digital marketplace and ensuring even the largest tech companies play by the rules."

Wolfson has asked the Competition Appeal Tribunal for a Collective Proceedings Order (CPO), allowing the case to proceed. As the claim is being brought on an opt-out basis, users - individuals, businesses, and public bodies - are automatically included in the proceedings.

"Microsoft’s conduct has had a profound and costly impact on millions of individuals and private and public sector organizations that rely on its software for daily business operations," said Kate Pollock, head of competition litigation at Stewarts, and part of the legal team.

"We believe that Microsoft abused its market dominance by imposing restrictive licensing practices that effectively shut down competition and inflated prices."

Groundhog Day for Microsoft

This isn't the first time that Microsoft has been accused of unfair software licensing practices.

Late last year, it was hit with a £1 billion lawsuit over claims that it was charging customers higher licensing fees for Windows Server if they used cloud platforms Amazon Web Services (AWS), Google Cloud Platform (GCP), or Alibaba Cloud, rather than Microsoft Azure.

Meanwhile, the company's also been referred to the UK's Competition and Markets Authority (CMA) by regulator Ofcom, which said it was concerned that cloud providers were using their strong position in software products to distort competition. A ruling on the matter is expected this summer.

Last year, Microsoft swerved an EU antitrust investigation by paying €20 million to Cloud Infrastructure Services Providers in Europe (CISPE) to settle an antitrust complaint about its cloud computing licensing practices, and promising to change some of its software licensing practices.

ITPro approached Microsoft for comment, but did not receive a response by time of publication.

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Emma Woollacott is a freelance journalist writing for publications including the BBC, Private Eye, Forbes, Raconteur and specialist technology titles.