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RealTime IT News

Calif. Cities Sue Microsoft For Overcharging

Microsoft has been overcharging customers for its Windows business software since 1995, according to a class action lawsuit filed in California.

The suit filed late last week in San Francisco Superior court by San Francisco city attorney Dennis Herrera claims Redmond, Wash.-based Microsoft violated state antitrust and unfair competition laws after it charged too much for its Windows operating system or Word and Excel programs. The suit represents California customers who purchased the business software between February 18, 1995 and December 15, 2001.

In addition to San Francisco, Los Angeles and the counties of San Mateo, Contra Costa, and Santa Clara are seeking an unspecified amount of damages as part of the class action.

The software covered in the class action includes MS-DOS, Windows 95, Windows 98, Windows 2000, Windows ME, Windows NT for workstations and versions of these products. Microsoft applications software includes Microsoft Word (word processing), Microsoft Excel (spreadsheet), Microsoft Office (a package of software which includes Word and Excel) and Microsoft Works Suite and Home Essentials 97 and 98 (packages that include Word).

California's filing has similar complaints but is separate from Microsoft's landmark $1.1 billion settlement with California's government agencies. The suit alleged that Microsoft violated the antitrust and unfair competition laws of California by restraining trade and monopolizing the market for operating system and certain applications software. The suit alleged that, as a result of these unlawful acts, Microsoft had overcharged California software consumers. However, that decision did not include individual municipalities.

If the courts agree to the claims, Microsoft could be responsible for paying out millions or even billions in damages for what it allegedly overcharged.

"We value our relationship with these important cities and we are grateful for the opportunity to provide them with great software at reasonable prices," Microsoft spokeswoman, Stacy Drake said in a statement.

Microsoft has been working with state regulators to resolve any outstanding legal issues from the federal government's landmark anti-trust settlement with the U.S. government in 2002. As part of the settlements, Microsoft said it is providing eligible buyers product vouchers, which can be used to purchase computer hardware or software products from vendors their of choice. Unclaimed vouchers will go towards hardware and software at schools.

In July 2003, the same San Francisco Superior Court granted preliminary approval of the $1.1 billion settlement. As a result, California consumers' four-year-old class action suit against Microsoft ended up in the form of vouchers worth from $5 to $29 after they called in to a toll-free number to file a claim.