Microsoft Dodges Class Action Bullet

One more remnant of the U.S. government’s antitrust case against
Microsoft has gone away with a federal ruling that denies class action
status to 39 plaintiffs who claimed the software company charged them too
much as a monopoly.

The U.S. Fourth Circuit Court of Appeals denied their appeal today,
saying that indirect purchasers of Microsoft software would not be
considered a separate class and were not entitled to seek damages.

Thirty-nine plaintiffs were seeking as much as $10 billion, according to
court filings. The original lawsuit was lodged in the late 1990s in the
aftermath of the U.S. Government’s antitrust case against Microsoft and a
court’s finding that Microsoft abused its monopoly by bundling IE on most PC
desktops, to the detriment of then-rival browser Netscape.

After the ruling against Microsoft, groups of plaintiffs lined up to file
suit, claiming that, as a monopoly, the company overcharged for the software
and for other damages.

After the government and Microsoft settled
the antitrust case, the lawsuits by groups of citizens continued to wend
their way through the court system with charges of harm, separate from
settlements with different states regarding the antitrust charges.

Today’s ruling essentially upheld a prior ruling from years ago that said
a consumer class, comprised of indirect purchasers, may not recover alleged
overcharges by Microsoft. In addition, the appeals court upheld a prior
ruling that said the plaintiffs claims that Microsoft suppressed
competition, or that product performance was degraded, was not valid.

The plaintiffs argued that Microsoft was able to require OEMs to accept
the terms of its licensing agreement, and forced them to preinstall the
Windows operating systems on personal computers they sell “and to act as
Microsoft’s agents in offering a second type of license, called ‘end-user
license agreements’ (‘EULAs’), for acceptance or rejection by consumers
under terms dictated by Microsoft.”

They also claimed that the integration of the IE browser with the Windows
operating system degraded the performance of their computers and should be
considered in the damages.

Nice try, the ruling said, but “[this] type of injury is simply not a
type for which plaintiffs can recover under the antitrust law.”

Mark Murray, a spokesman for Microsoft, called the decision “a significant
milestone for Microsoft. This ruling is an overwhelmingly positive decision
that essentially marks the end of this case.”

The ruling said it would “be entirely speculative and beyond the
competence of a judicial proceeding to create in hindsight a technological
universe that never came into existence. It would be even more speculative
to determine the relevant benefits and detriments that non-Microsoft
products would have brought to the market and the relative monetary value … to a diffuse population of end users.”

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