What the complaint says

Auckland firm Infraserve is complaining to the Commerce Commission about Microsoft's Software Assurance licensing programme

In a preamble to the complaint Infraserv outlines its views on Microsoft’s changes to its licensing model and the proposed new licence programme, Software Assurance.

It says licensees around the world have complained about aspects of Software Assurance, including: its confusing nature, a lack of clear documentation, the absence of contract wording, the removal of commonly accepted implied rights and especially the right of loyalty programme discounts on upgrades, price increases and lack of fairness and/or certainty as to Software Assurance’s new proposed rights.

It points out that Microsoft has a substantial degree of power in the market for operating systems and applications.

The complaint itself alleges that Microsoft's licensing changes:

- result in contracts that lessen market competition by removing the previous right to upgrade via the product release model, replacing it with the proposed software-as-a-service model or rebuy-the-product model

- combined with actions such as changing the composition of bundled products are an exercise of its market power designed to prevent or lessen competition

- will disadvantage Infraserv and all similar consumers and Microsoft is taking advantage of its market power for prohibited purposes.

Infraserve says it has evidence of the alleged anti-competitive conduct in emails with Microsoft New Zealand executives, preserved copies of the licensing section of Microsoft’s website and publicity material on the licensing programme.

Software Assurance charges are set on the basis of a percentage of the list price of the product paid two years in advance. The complaint says there are no commitments to deliver any software, only the right to upgrade to the latest version of software made available during the covered period. This right previously existed without any requirements for advanced payment to preserve that right.

Infraserv alleges that this single promise to provide the right to upgrade stands in contrast to Microsoft’s public announcements as to "software-as-a-service", and does not properly inform the public, which is likely to mislead, as to the nature of the programme.

Infraserv wants remedies for all Microsoft New Zealand customers, not just itself, and wants to ensure customers are not asked to pay for Software Assurance two years in advance.

It is also asking the commission to consider whether it has the powers and grounds to recommend to that the Minister of Commerce recommend an Order in Council declaring that Microsoft’s goods and services are to be controlled.

Terms of control would include: preserving New Zealand customers’ rights to upgrade at the historical average discount previously extended; preserving rights to upgrades of bundles previously sold; fixing the cost of (as a percentage of the licence price) the term of contract and terms of contract for product maintenance programmes; fixing the cost of product; conduct remedies both to redress the effect of previously proven anti-competitive behaviour in the same terms as agreed between Microsoft and the Department of Justice and the states' Attorneys General in the Federal Court in the US -- modified to reflect harm caused to the New Zealand market; and conduct remedies to prevent further misleading and deceptive conduct.

Related Links

Complaint in full

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