Vista Downgrade Lawsuit: Microsoft accused of price gouging

Chicago (IL) – Microsoft’s Windows 7 operating is soon to release, thus putting that which was Vista in the past. Unfortunately, the business practices utilized to put Vista into the limelight, and to have the OS become adopted worldwide, are still causing the company distress. A recent individual lawsuit against Microsoft has now been revised. The plaintiff is seeking class-action status against Microsoft for price gouging.

On February 11, 2009 Emma Alvarado, from Los Angeles, CA filed a lawsuit in a Seattle federal court over a fee in which she was charged when downgrading her operating system from Windows Vista to XP. She was hoping to gain compensation, feeling that Microsoft was in violation of unfair business practices and consumer protection laws in the state of Washington — as supposedly users are allowed to downgrade a product within Windows licensing rights to an older edition and not be forced to pay for an additional license where basically the newer license is transferred to the older edition.

According to Computer World, the plaintiff, Alvarado, has now revised her lawsuit to include her idea that Microsoft in fact, gains a profit via its Vista downgrade rules. She no longer wants to simply receive compensation for damages herself, but also wants the case to gain class-action status. If this were to occur, Microsoft could be confronted with potentially sticky issues simultaneous to the rollout of its new flagship operating system, Windows 7.

Her complaint rests on the concept that the only way an individual could downgrade was to go from a Vista product to XP professional, and the only way to downgrade (at least initially) was to have Vista Business or Vista Ultimate previously installed on your device, and then pay the downgrade license fee which enabled the Vista machine to be supplanted with Windows XP professional.

The lawsuit says, “Microsoft appears to have conceived and implemented the ‘right’ for consumers to ‘downgrade’ to the Windows XP Professional operating system in order to: (a) maintain and/or inflate its sales figures for the Vista operating systems (particularly the Vista Business and Vista Ultimate versions … and (b) recoup its substantial investment in the development and production of the Vista operating system by forcing consumers to purchase the premium, more expensive versions of the Vista operating system (Vista Business or Vista Ultimate) in order to ‘downgrade’ to the Windows XP operating system.”

The change in lawsuit is very reasonable as the majority of home users don’t have a need to purchase a computer pre-loaded with Vista Business or Vista Ultimate, and really don’t even need XP Professional, however Microsoft will only allow for devices operating those Vista operating systems to downgrade, and only to Windows XP professional. The end result, she claims, is that the company operates in a manner which makes it a much higher profit were users able to buy new machines with the less costly Windows XP versions alone.

The suit continues to say, “Prior to permitting the consumer to ‘downgrade’ to Windows XP Professional, Microsoft first mandates that the consumer ‘upgrade’ from Vista Home Basic or Vista Home Premium to either Vista Business or Vista Ultimate — thereby forcing the consumer to incur an unnecessary expense of $130, perhaps more or less, depending on the retail outlet, and creating revenue for Microsoft in the same amount.”

Dell is a prime example of this issue. The company was forced to charge customers $150 to downgrade customers from Vista to XP citing a $20 installation fee on their part, but also being forced to charge the $130 for the upgrade from Vista Home Premium to Business.

[Editor’s note:  In the past, Microsoft employed similar practices regarding their operating system IP. During the days of MS-DOS, when competing versions of DOS were created, Microsoft recognized the threat to its revenue streams and imposed licensing restrictions on new PC manufacturers such that each new PC sold had to have Microsoft’s MS-DOS on it, and if not, then Microsoft would still be paid their MS-DOS licensing fee (regardless of which OS was ultimately installed). By removing the free trade ability of computer makers to install any operating system they wanted without paying a full MS-DOS fee to Microsoft, a requirement mandated by Microsoft if that computer maker wanted to sell any Microsoft operating system, Microsoft always got paid (Introduction to Industrial Organization, by Luís M. B. Cabral). It was in this way that Microsoft amassed its huge fortunes by forcing the early computer makers into a contractual arrangement of all-or-nothing at a time when PC makers very much wanted to sell PCs, and when Microsoft’s successful DOS operating system was extremely popular. It’s something every consumer ever has since paid for. Whenever we turned to PC-DOS, IBM’s OS/2 or any other fee-based alternate OS, we still gave Microsoft our money.]