Original URL: http://www.theregister.co.uk/1999/11/24/suit_trails_30_billion_tab/

Suit trails $30 billion tab for MS Windows ‘over-charging’

But it'll take a lot more work to make that one stick...

By John Lettice

Posted in Business, 24th November 1999 13:56 GMT

Telephone numbers far too long to remember are beginning to be tacked onto the class action lawsuits being launched against Microsoft, on behalf of lucky American consumers - the latest, filed in Ohio yesterday by attorney Stanley Chesley, is based on the premise that the Beast of Redmond has contrived to extract $10 billion in excess pricing by over-pricing Windows. Chesley's day job seems to include beating the crap out of the tobacco companies, so he knows about huge piles of money, and the way things have been going in recent years (as far as tobacco goes, anyway) has no doubt led him to believe that he knows how to extract it, too. Speaking to Reuters yesterday he claimed to have estimates that Microsoft had over-charged US consumers by $10 billion, and happily suggested that a win in the lawsuit would result in a tripled award of - phew - $30 billion. But as far as the territory covered in the current antitrust case is concerned, Chesley's numbers are almost certainly too high. One of the more thorough estimates of Microsoft overcharging, published last January and reported in The Register here, was carried out by the Consumer Federation of America. This came up with a total tab of $10 billion, but did so on the basis of the estimated total increase on Microsoft's per-PC revenue for bundled software. That included applications, and you may recall that although the US states' lawsuit intended to pursue Microsoft in the applications market originally, this aspect was dropped from the suit when it was consolidated with the DoJ's. So even if Judge Jackson's final (?) verdict establishes consumer harm, it will only do so in the OS market - consumer harm for applications remains to be proved. Nevertheless, the ambulance-chasing attorneys and maybe the odd PC OEM (if they're hard enough) could well find their thoughts turning to apps as they chase the really big money. The Consumer Federation of America study reckoned that Microsoft's per-PC revenue rose from $25 in 1990 to $62 in 1996 (and wouldn't fresher figures be interesting). That increase has been caused by the bundling of Windows with the OS, followed by its integration (allowing the total price to go down while stopping you buying just the OS), and by the additional bundling of applications. Effectively, the increase in Microsoft's per-PC revenue has been achieved via bundling of more and more products. It hasn't entirely been compulsory to bundle the apps, but as the trial evidence clearly shows there has undoubtedly been pressure on OEMs to go with Microsoft applications rather than, say, Lotus. So the application-based lawsuit really ought to come, because Microsoft's sales come in large part via the OEM channel, and because it's actually difficult to quantify harm if you don't consider apps sales, which are deeply bound into OS sales. ®