April 8, 2002 5:25 PM PDT

New Zealand complaint targets Microsoft

A New Zealand company has filed a complaint against Microsoft, alleging that a subscription-like software-licensing program violates that country's laws.

The complaint claims that Microsoft's Software Assurance program allows the Redmond, Wash.-based software giant to take "advantage of its market power for prohibited purposes" by forcing customers to upgrade their software faster than they might desire, according to the complaint. The complaint was filed on behalf of Infraserv, an information technology company owned by Clendon Feeney, which is the law firm that filed the complaint.

Under Software Assurance, licensees effectively purchase a two-year software subscription for a specified number of workers. If a company has 1,000 employees and it wants each of them to have Windows and Microsoft Office, it buys a 1,000-seat license for those software packages.

Subscribers get all updates for free for the next two years, but that's the rub, according to the complaint. In the past, companies that bought Microsoft licenses could skip some upgrades to save money. Those older licensing programs, though, have been phased out.

Among other problems, the new program leads to price increases, according to the complaint, and eliminates the "presumptive right of loyalty program discounts on upgrades." The complaint asks the commission to examine whether it has the power and the grounds to control Microsoft's behavior with regard to the program.

Analysts, and even Microsoft executives, have said the program, in certain circumstances, could lead to higher costs and more rapid upgrades for some customers.

Microsoft, though, says the program violates no New Zealand law and is similar to programs from other software manufacturers.

"Our new business licensing program was designed to make a complex process easier to manage and make it easier (for businesses) to buy and track their software," said Microsoft spokesman Dan Leach. "We're certainly happy to sit down with the Commerce Commission and explain our new licensing program and how it is similar to our competition's. We're confident that we followed all New Zealand laws about how we sell software."

Ironically, Software Assurance was initially test marketed in New Zealand and Australia.

 

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