Tangent Suit Claims Microsoft Soaked Partners

By John Hazard  |  Posted 2006-02-21 Email Print this article Print

Tangent, an OEM and Microsoft partner, alleges in an antitrust suit that Microsoft used its market dominance to overcharge OEMs, distributors and resellers.

Updated: Microsoft looks forward to defending itself against Tangent's federal complaint, stating, "No court has ever found that Microsoft charged too much for its products."

Microsoft has been hit with yet another antitrust claim, this time from a partner that alleges that the software vendor abused its market dominance to extract exorbitant fees from OEMs, distributors and resellers for its operating system licenses.

Tangent, an OEM based in Burlingame, Calif., filed a complain Feb. 14 in U.S. District Court for Northern California, seeking an unnamed amount from the software giant, claiming the software maker has been able to overcharge for its operating system as result of Microsoft's "artificial" market dominance.

"Because Microsoft, through its exclusionary practices, eliminated its competitors from the market and has blocked entry of new competitors and expansion of existing rivals, it has been able to increase, maintain or stabilize prices at anticompetitive levels" since the late 1980s, the complaint said.

Click here to read more about Microsoft's plans for Vista.

"Microsoft's supra-competitive prices are not the result of superior products or competition on the merits. Rather, Microsoft has been able, at the financial expense of purchasers to artificially inflate its profits…."

Tangent alleged further that Microsoft entered into restrictive agreements with OEMs and system builders, limiting or eliminating their ability to feature non-Microsoft products.

Tangent builds configured-to-order desktops, notebooks and servers for educational institutions, government agencies and enterprises, using Microsoft Operating Systems.

Initial hearings are scheduled for June.

Read details here about how Microsoft tries to fight piracy in the channel.

"Frankly, we're puzzled by Tangent's various and assorted claims, and fail to see how they're relevant to OEM pricing," said Jack Evans, a Microsoft spokesman. "The simple fact is that no court has ever found that Microsoft charged too much for its products. We look forward to vigorously defending ourselves against these baseless claims."

OEMs, distributors and resellers were excluded from a 2000 class action law suit filed by Microsoft Licensees, alleging antitrust violations.

Tangent's complaint includes more than 20 pages of history chronicling Microsoft's uncompetitive practices, including the sagas of DR DOS and OS/2, two early competitors for the operating system market, which were eliminated as operating system alternatives by the early 1990s, and the "barrier to entry" Microsoft cultivated with its family of applications that kept new competition out, according to Tangent.

Such practices led the U.S. Department of Justice to file antitrust claims—U.S. v. Microsoft—against the company in 1994, which were settled in 2001.

Tangent's claim against Microsoft declares Microsoft in continued violation of that settlement and the Sherman Act, notably in the server arena, where it says the vendor's server operating system uses "special, undocumented interfaces used by its servers to communicate with one another when multiple servers are part of the same network," shutting out incompatible competitors.

The release of Vista, Microsoft's next-generation operating system, promises more "bundling, tying and undocumented interfaces" that will stifle competition, the claim stated.

Editor's Note: This story was updated to include comments from Microsoft spokesman Jack Evans.


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