UK reseller sues Microsoft for £270m in damages claiming prohibitive contracts choke off surplus Office licence supplies
- Reference: 1617881047
- News link: https://www.theregister.co.uk/2021/04/08/valuelicensing_microsoft_lawsuit/
- Source link:
The claim, filed in the UK's High Court in London, asserts that Microsoft stifled the supply of preowned Microsoft licences in the UK and EEA and added clauses into contracts that restrict customers reselling their licences (in return for a discount).
[1]
"The net result," alleges the Derby-based software reseller, "has been higher prices and less choice for customers, who have been steered into cloud-based Office365 and Azure subscriptions."
Microsoft has not been subtle in its desire to shift users to a subscription model. An [2]ad campaign was launched in 2019 aimed at highlighting the benefits of the 365 approach versus the old perpetual-licensed Office 2019. Earlier this year it [3]slashed the length of support perpetual licence holders could expect.
[4]
That said, companies like ValueLicensing have been able to make a pound or two over the years by reselling surplus volume licences. On its website it trumpets £1m saved by an NHS trust with 4,800 Office 2019 Pro Plus licences and up to 70 per cent savings possible via surplus Microsoft licences.
ValueLicensing alleges in its lawsuit that the contractual prohibitions imposed by Microsoft as well as non-disclosure agreements (NDAs) have impacted preowned licences on the market.
The company claims that the disputed Microsoft practice has been ongoing "since at least 2016" and has calculated that the sales that it believes subsequently did not happen because of this would have resulted in £270m of profit. "Losses are continuing," it said, "and ValueLicensing reserves the right to amend the scope of the claim."
Certainly, Microsoft is showing no signs of turning away from the drive to a subscription model.
"Microsoft is the dominant provider of office software applications and operating systems. By suppressing the availability of preowned perpetual licences that compete with its latest Office365 product lines, it has tried to minimise the activities of its reseller rivals," ValueLicensing claimed.
Microsoft has a strong position in the enterprise space. Competition against its Office productivity suite is limited (despite the best efforts of the likes of LibreOffice) and companies pay handsomely in order to use its products.
Hence the industry that has sprung up around surplus licences, particularly for cash-strapped organisations such as the UK public sector.
As well as costs and relief, ValueLicensing has also asked for "various measures... to fully restore and maintain competition and choice in the market."
These include a removal of NDAs that impact the trade in perpetual licences and "a finding that the restrictive clauses on relinquishment and retention in existing agreements are illegal and enforceable."
Jonathan Horley, founder and managing director of ValueLicensing, said that the disputed actions of Microsoft "impacted almost every organisation that provides desktop software for its workforce in the UK and the EEA."
"ValueLicensing is not the only victim," he added.
Indeed, while today's action has been filed at the UK's High Court, it will doubtlessly be followed closely by other resellers. Blighty is not the only country where surplus licences are resold. ®
Updated at 14:30 UTC 8 April 2021 to add:
[5]
A Microsoft spokesperson told The Register : "Microsoft is unable to comment on ongoing legal matters."
Get our [6]Tech Resources
[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YG8opoQmqaqp0A12B4Nl1wAAAFE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://www.theregister.com/2019/02/07/office_2019_365/
[3] https://www.theregister.com/2021/02/19/office_ltsc/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YG8opoQmqaqp0A12B4Nl1wAAAFE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YG8opoQmqaqp0A12B4Nl1wAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://whitepapers.theregister.com/
I can, but more in someone being a nuisance to an organisation that deserves every nuisance going.
Re: "Earlier this year it slashed the length of support perpetual licence holders could expect."
Definition of perpetual
a : continuing forever : everlasting perpetual motion
b (1) : valid for all time a perpetual right
(2) : holding something (such as an office) for life or for an unlimited time
Re: "Earlier this year it slashed the length of support perpetual licence holders could expect."
Devils advocate here. Perpetual for the life of the machine was their usual claim in the olden days.
Now machines last a lot longer and people aren't upgrading every 12 months
Re: "Earlier this year it slashed the length of support perpetual licence holders could expect."
"Now machines last a lot longer"
My Commodore 64 begs to differ. All original apart from a few caps ... and a USB interface etc.
Re: "Earlier this year it slashed the length of support perpetual licence holders could expect."
I think you know what he meant. ;) 20 years ago hardware performance was explosive; in 2000 a 5 year old computer would have been (if you bought the bleeding edge hardware) a 486dxSomething with a MHz count in double digits and the 2k PC would probably have been an AMD Thunderbird with a performance that'd just gone through the Ghz barrier.
The next upgrade cycle from 2000 to 2005 the upgrade would have been from a ~1 Ghz single core box to a duel core Athlon x2 running at ~3Ghz (or a single core P4 that could double as central heating running at 3Ghz if you were intel inclined, which few techs at the time were...)
While performance has increased in the last 16 years, it's entirely possible to run modern applications on 10-15 year old hardware; I have > decade old kit floating around at work which were redeployed from the scrap pile during the pandemic due to a sudden need for hardware for home use combined with suppliers not having any kit at affordable prices. Redeploying decade old hardware in 2000-2005 would have been completely impossible.
Re: Life of the machine
Go back a little further and the licence was for one machine at a time and the only limit on that was finding something compatible in working order (or later on, an emulator). Support was often "only thing that will be fixed is defective installation media" and the only remedy available for any problem (including burning your office to the ground) was replacement installation media. The warranty was "it will work broadly in line with the printed documentation" and the printed documentation was a small card with installation instructions. Any other form of support required money.
I have no problem with Microsoft saying the license for the software you have lasts forever but there will be no updates. They wrote the code, they choose the licence. On the other hand, my "no source code, no sale" policy means I dealt with this problem when it first reared its ugly head last millennium.
Always read the [1]EULA (unless it is over 20 pages long in which case there is no point as you have already found proof that the offer is a scam).
[1] https://www.makeuseof.com/tag/10-ridiculous-eula-clauses-agreed/
Re: "Earlier this year it slashed the length of support perpetual licence holders could expect."
"Perpetual for the life of the machine was their usual claim in the olden days."
IOW they didn't mean perpetual.
Re: "Earlier this year it slashed the length of support perpetual licence holders could expect."
Isn't that the same as "Unlimited broadband (Subject to Fair Use Policy)". Either something is unlimited or it isn't
Re: Unlimited broadband
Not quite. Unlimited broadband is actually exists but comes with an unlimited monthly bill.
Re: Unlimited broadband
Wasn't there once a BT product broadband described as "Infinity", but which was actually only up to 8x faster?
It seems to me that if "infinity" is only eight, then "unlimited" is probably only four, or perhaps six at best :-)
Re: Whats in a name?
Wasn't there once a BT product broadband described as "Infinity"
Yup. In my occasional forrays into marketing, I was warned against using names like that. So worked for a company (BRT) that had the 'Very High Speed Data Loop' where very high meant it it was running at less than Infinity speeds. It's kinda like Tesla's 'Gigafactories'. Keeping that naming convention, then next size upgrade would be Terafactory. Scarey thought. Or perhaps Petafactory, which could lead to increased complaints about inappropriate behaviour from staff or visitors.
Re: "Earlier this year it slashed the length of support perpetual licence holders could expect."
It was a *perpetual licence* but not an entitlement to *perpetual support*.
No software vendor can keep providing free patches for their old software forever. The cost of providing future patches for a period of time is included in the purchase price. So *some* limit is reasonable.
Though I'd argue that bug fixes should be provided for 6 years from date of purchase, at least in the UK. Physical goods that were defective when sold have to be fixed if the purchaser notices the fault within 6 years of purchase (Consumer Rights Act 2015). I think the same should apply to software. Sadly, no software vendor provides patches for that long.
Re: "Earlier this year it slashed the length of support perpetual licence holders could expect."
I think 6 years is way too short.
e.g. I have an old iMac, and due to hardware limitations it could not be upgraded to newer version of OSX so it was stuck on Snow Leopard and Apple, in their typical style, did not bother keeping it security patched for long.
So rather than bin a perfectly good machine (or use it without internet access) I installed Linux on it, and its is still running happily. Low spec but it does the job for undemanding usage such as a bit of email, web browsing, video / music playing, word processing etc.
Is it just me that thinks that resellers are a dying breed, and somewhat redundant in fact? Why go to a computer shop with limited choices, more overheads and higher prices when you can go direct?
This isn't limited to computing. I'd buy an album direct off a musician in preference to off some tax dodging mega retailer too. Or food from a farm shop over a supermarket.
Strange times.
I am still surprised that MS has no real competition in the Office suite software space. I know Libreoffice and Openoffice exist as I use Linux Mint as my daily driver and LO Calc is open on my desktop as i write this. But despite them being mature products OO & LO Microsoft office compatibility is still hit and miss and opening documents created in MS Office can often result in formatting errors, something that then makes them unsuitable for deploying in an environment where people are expected to be able to open and save in MS Office file formats.
There is definitely a gap in the market for someone to develop a almost drop in replacement for MS Office with good compatibility in opening/Saving Word, Excel and Powerpoint docs, but without the Office365 subscription model. Preferably including an alternative replacement to Outlook as this is something that is missing from Open/Libreoffice suite.
Somehow I can't work up much sympathy about someone not being able to make enough money out of selling Office licences.