Microsoft accused of hidden price rises

THE MAIN US consumer organisation, the Consumer Federation of America, said yesterday it was considering launching a class-action lawsuit against the computer giant Microsoft, claiming that it has overcharged customers around the world to the tune of $10bn.

In a report released yesterday, the CFA said that Microsoft's practice of "bundling" its software and stipulating exclusive deals with hardware producers, had allowed it to conceal rises in its prices and profit margins at a time when other companies were having to cut both.

The report, "The Consumer Case against Microsoft," was published as the US government's anti-trust case against Microsoft, which is being heard in Washington, was starting to wind down. The trial, which has heard a succession of accusations from rival software producers and wholesale customers about the company's marketing methods, could end as soon as next week.

In its report, the CFA accuses Microsoft of deliberately using its market dominance to keep prices of its software high and push consumers to buy more - and more sophisticated - software than they need. It dismisses Microsoft's claim that its Windows software is free to the consumer, saying that the cost is merely concealed, and has been rising both in relation to earlier versions of its own software and in relation to that of other suppliers.

It calculates, on the basis of documents made public during the Washington trial, that Microsoft has doubled the price of its operating systems over the past decade and that each computer purchaser is overcharged by between $35 and $45. Applied to the 250 million personal computers sold with Microsoft operating systems, this amounts to an excess profit of $10bn, according to the CFA.

Calling for tough measures against the company, the director of the CFA, Mark Cooper, said: "The pricing abuse will only get worse if Microsoft is not disciplined sternly by the anti-trust court." The effect of Microsoft's virtual monopoly, he said, was "like a tax on a computer".

Dr Cooper said the CFA, or individual US states, could decide to take Microsoft to court for overcharging consumers, much as others have instituted lawsuits against US pharmaceutical and utilities companies.