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Microsoft Blames Anti-trust Legal Fees for Price Increases 570 writes "BBC news has an article about the Californian anti-trust case and points out that Microsoft tells users would suffer from this: 'Somebody ends up paying for this,' said Microsoft attorney Robert Rosenfeld. 'These large fee awards get passed on to consumers.' Do they really understand why there are laws?"
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Microsoft Blames Anti-trust Legal Fees for Price Increases

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  • by DroopyStonx ( 683090 ) on Saturday May 15, 2004 @09:36AM (#9160650)
    I remember when MS got slapped with that fine. People said, "Eh.. it's no big deal to them to begin with, but with what they lost, they'll gain back with a simple price adjustment."

    So basically they still haven't learned their lesson. Cost of doing business.
    • by capt.Hij ( 318203 ) on Saturday May 15, 2004 @09:52AM (#9160706) Homepage Journal

      So basically they still haven't learned their lesson. Cost of doing business.

      It is more than just a cost of business. Microsoft is saying that they can shift their cost curve, customers will pay, and there is little repercussion for the company. The only times that a company can get away with this is if it is either a monopoly or sells addictive products. This is why the government can jack up the prices of cigerettes cia taxes. Microsoft is admitting that it is a monopoly cuz I highly doubt that most people just can't get enough of XP.

      • by bwy ( 726112 ) on Saturday May 15, 2004 @02:00PM (#9162210)
        I highly doubt that most people just can't get enough of XP.

        What does that say about Linux on the desktop? It is free and readily available yet almost nobody is using it.

        So why else are people using XP, if they aren't being forced to and there is an alternative? I've been reminded of why yet once again. My current project is a digital picture frame inspired by a previous slashdot story. It took several days of hacking to get RedHat 9 to do what I wanted (boot, log in, and go to a slideshow with no mouse cursor and never go into standby, and power down gracefully when the ATX power button is pressed. Well, just about nothing was pre-compiled. I had to compile the slideshow, Feh, along with imlib2 and several dependencies. I had to search all over and finally find and compile "unclutter", an app that would make the cursor go away. I had to do a kernel mod (powewswitch.o) which I still don't fully understand that picked up on the APM suspend hint and instead runs "shutdown -h now). Also, I was running KDE but then realized it was uncessary to use it's bloatware for this so went with Icewm only to find now a lot of the things I had configured to do with powerdown and stuff now had to be tweaked back to the Xfree86 config file. Also, RH 9 threw me for a few loops because it still used GDM even if you don't install Gnome and only run KDE. However, they put KDM stuff in the control panel making you think you can change login options there, only to get frustrated when they have no effect.

        Anyway, this is a propietary project of course but a lot of the things were things oridinary users might want (slideshow apps, powerdown on power switch press, etc). Secondly, XP still would have been a better choice I think. It still boots much faster than RH 9 with everything turned off and IceWM. And, it would have been easier to configure- because most software is ALREADY COMPILED for one. So I did this project using Linux because I'm a geek and wanted to learn something new. Joe User however is going to turn to XP. Not because Microsoft is a monopoly but because it does things better than everyone else- like it or not.

        P.S. I guess I can expect a flame now on the way I did things with my RH 9 install. Remember, though- I'm a software engineer and have loaded Linux on several boxes at my shop over the years. My whole point is usability by everyday people.
        • Any linux system comes with any number of programs that will hide the mouse cursor -- they're called screensavers.

          What I would have done is, first of all, use Gnome. Then configure your screensaver to have random pictures from a given directory (easy with xscreensaver, gnome's default). Then you change your GDM options to automatically log you in, then you go and trim out your boot options (disable loading of networking, etc, you can really speed up the boot by doing that). After that, change your WM to be
    • by smallfries ( 601545 ) on Saturday May 15, 2004 @10:04AM (#9160748) Homepage
      That's the point that they're missing. The goal of anti-competition law is to make anti-competative behaviour unprofitable. So they continue to abuse their monopoly position, there are more anti-trust cases, and they get more fines. Those fines raise the basic cost of doing business for them and so they raise their prices. This makes their product less attractive than those that don't have to subsidise the cost of legal action, so that the market then corrects the situation.

      In the long term, this cost of doing business will make them less profitable and their product less successful. Then we'll get some kind of radical change and the system will stabilise around some new stable point. This is anti-competition law working, although it takes a long time to play out...
      • by zogger ( 617870 ) on Saturday May 15, 2004 @10:33AM (#9160895) Homepage Journal
        if any law infractions revolved around named human beings, and not this non person person they call a corporation. If we re adjusted the laws back to named humans are responsible for their actions, and if the fines came out of personal bank accounts of whomever issued the orders that resulted in the crimes committed, you'd see a lot more honesty with companies. And the government could mandate a price freeze as well on their products to go in conjunction with any fines, or they could actually institute a "three strikes and you are out" provision like they have with human beings, and in the case of corporations, just completely revoke their charters after a third conviction. But they don't do that too often, companies are allowed crime after crime after crime after crime, yet they still stay "in business".

        You make Bill Gates pay a big chunk out of his pocket, then make him do 500 hours community service picking up trash next to the road,after a few months in lockup, like any regular guy would get for stealing those sorts of sums, you'd see changes in his company's predatory practices, and pronto. You give him a perpetual get out of jail free card, he'll keep using it. It's that simple.

        There's a variety of techniques that could be used to make corporations more honest, but bottom line is, nearly all the legislators, judges, and people in the executive branch make the bulk of their money from being stock holders and/or being in ownership or management positions in corporations, they profit handsomely from this corporate insulation, so they will NOT write, vote for, or sign into law anything that could hurt them personally. They keep up the laws that benefit corporations, and they keep up that level of legal armor and shielding that corporations have, that private individuals don't have.

        If YOU defraud someone, it comes out of your pocket and you can't "pass it on" as a cost of doing business. If you do it a few times, you will personally go to jail, some times even one time depending on the crime. Pass a bae check over 100$, it's a felony, you could serve time. a corporation defrauds thousands of people out of billions, or puts a competitor out of business using questionalb tacts, those corporate officers hardly ever see any jail time. It happens, but it's extremely rare. Corporations can just keep getting away with it, time after time, and when they are so huge as to be dominant market players, it never results in any significant changes to the corporation, other than they learn to obfuscate the bookeeping better, and THEN they figure out what new laws that would benefit them better, that might keep them from getting caught, etc, that need to be passed, and then they go to work on that with campaign contributions and lobbying, using money they half stole in the first place. It's a corrupt vicious cycle, organized gang activity basically, and gates and company are just one example of many.

        The system is so broken and so corrupt there is little hope that it will get fixed any time soon. I doubt it will frankly. And there is so little difference between "government" and really really large international corporations that we should probably just end the illusion that there is.
      • by Tony-A ( 29931 ) on Saturday May 15, 2004 @10:48AM (#9161028)
        The goal of anti-competition law is to make anti-competative behaviour unprofitable. So they continue to abuse their monopoly position, there are more anti-trust cases

        Simpler and more effective would be largish excess profits tax on monopolies.
  • Excellent (Score:5, Funny)

    by Killjoy_NL ( 719667 ) <slashdot&remco,palli,nl> on Saturday May 15, 2004 @09:36AM (#9160651)
    With a bit of luck, this will come back to bite them in the gonads.

    price increases steadily, security holes found repeatedly, consumer's irritation growing until they say "Well you know what Billy boy, up yours, we're switching to linux (or OS X)"
    I just hope there's a viable simple alternative by then to which the customers can switch.
    • Re:Excellent (Score:4, Informative)

      by tomstdenis ( 446163 ) < minus poet> on Saturday May 15, 2004 @09:40AM (#9160667) Homepage
      As much as that sounds plausible it's not always. My Presario 2180CA laptop [for instance] is fairly Linux resilient. ACPI crashes it and repeatedly it fails to detect the keyboard [I've never had to "configure" a keyboard]. It got to the point where I just put WinXP on my laptop [well the copy that came with my laptop] because I simply just wanted to *USE* my laptop.

      So really hardware vendors have to stop cutting corners before you can just blanket state "oh just use Linux".

  • by WolfWithoutAClause ( 162946 ) on Saturday May 15, 2004 @09:37AM (#9160655) Homepage
    Then it makes the value proposition look even better for Linux distros.

    This is a good thing.

    • by xSauronx ( 608805 ) <xsauronxdamnit@gmail. c o m> on Saturday May 15, 2004 @10:03AM (#9160739)
      except that a huge number of people dont pay for windows separately; they get it packaged...or pirate it. in either case, the total cost of windows is zero the the end user.

      If the cost keeps going up, no matter the reason, so will piracy of the product. Wed like to think more people would try linux, but they wont. My brother pirates windows; ive hadned him linux demos and despite only listening to mp3s and surfing the web hed rather pirate the windows he knows; then get a free operating system he DOESNT know; that may or may not work with all his hardware.

      In fact, he reccomended to my mother the other day she try linux, she won't and its not because of the price. She "doesnt want to learn anything new"

      Shed rather live with constant viruses with Windows and Outlook and problems with Internet Explorer than even try Thunderbird or Firefox and "learn something new" despite ALL the buttons are pretty clearly labeled, and you have to be just plain lazy to use that as an excuse. I even offered to switch all her contacts and bookmarks over, and get her junk mail filtereing started (something Outlook doesnt have) so she could email in peace...still no.

      As much as Id love to see linux mature and be better for everyday everybody use; I think its going to take that and then some to get people to actually use it once its ready.

      Personally, I think it sucks. Id prefer linux myself, except Im a gamer...and tuxracer isnt what Im looking for.

  • by jarich ( 733129 ) on Saturday May 15, 2004 @09:37AM (#9160658) Homepage Journal
    MS seems to factor in anti-trust suits as the cost of doing business and rather than take it out of their profits, they just ramp up the price.

    I gotta buy some of their stock one of these days... it's not that I believe in the concept or think it's right... it's just working for them so well!

  • Nice (Score:3, Insightful)

    by Yaa 101 ( 664725 ) on Saturday May 15, 2004 @09:38AM (#9160660) Journal
    Nice to let your customers bleed for your criminal conduct... More reason to leave them and use a real OS.
  • by Lanhdanan ( 676256 ) on Saturday May 15, 2004 @09:38AM (#9160661) Homepage
    Im getting SO tired of us paying for their mistakes? There outta be a law to prevent companies making people pay for them getting pasted with fines due to their own law breaking policies ...
    • The government has the authority to dissolve thier charter. The justice department should have siezed thier assets and disolved the company. This would have sent a strong message that unethical business practices will not be tolerated and many other companies would clean up thier act.

      Before anyone starts claiming that this is over the top, remember, Corporations are granted a charter expressly to advance the public good. thier charter can be revoked if they are found to not be doing that.
    • by rokzy ( 687636 ) on Saturday May 15, 2004 @10:22AM (#9160818)
      it would be so much easier if people could be prosecuted for "being a dick".

      it could be an on the spot fine of 0.5% of your total value.

      an officer could just follow Gates around handing him tickets like toilet paper and saying "stop being a dick Bill... Bill, stop being a dick... you're still a dick Bill..."

      Darl McBride? what a dick, every time he opens his mouth shove a ticket in.

      those retards who have crap cars but think making them really loud makes them good, "hey, you're car sounds like a dying go-kart you dick!". kaching - more money for schools and hospitals.
  • by virtualone ( 768392 ) on Saturday May 15, 2004 @09:38AM (#9160662)
    hey mr. policeman.. you better not give me that speeding fine.. or else.. somebodies bank will get robbed.. you know, somebody ends up paying for this.
  • Only reasonable (Score:5, Interesting)

    by k12linux ( 627320 ) on Saturday May 15, 2004 @09:38AM (#9160663)
    Lord knows they can't afford to take the legal fees out of a measly 500% profit margin or the big stockpile of cash they are sitting on.
  • Please.... (Score:4, Insightful)

    by El Cubano ( 631386 ) on Saturday May 15, 2004 @09:39AM (#9160665)

    These large fee awards get passed on to consumers.

    Like MS couldn't settle for something a little more reasonable than their 80%+ profit margins on Windows and Office. This is such bull. It's designed to get the government and public to be more accepting of their outrageous pricing.

  • by Cryect ( 603197 ) on Saturday May 15, 2004 @09:40AM (#9160670)
    "Mr Crew has billed Microsoft just over $3,000 an hour for his own work, as well as more than $2,000 an hour for other lawyers on his team. " What lawyer is worth even $200/hr (more on par on normal) much less several thousand dollars per hour. Cause I'm sure no one else could have done Mr. Crew's job just as well for less. definately something wrong if that was approved for lawyer fees after Microsoft lost. (but hey who didn't know that there was something wrong with the legal system in the States)
    • In civil suits, the plaintiff's attorneys normally take 33% of the winnings. In this case, they're only asking 25%. Why do judges allow this? It's because of the substantial risk involved in taking a case like this. If the plaintiff loses, they get nothing. When representing a defendant, they are paid by the hour, and make damn sure they get that retainer up front. The risk is quite substantial, because a lawyer who works for 2 years on a big case and gets nothing is going to have a hard time eating. Allowing large contingency fees increases the likelyhood that these cases ever see the inside of a courtroom. Since contingency fees tend to be used when the little guy is suing the big guy, this tends to help the people who need it most and hurt the people who feel it least. Whether $3,000/hour is appropriate to further the interest of justice is left to the discretion of the judge handling the case, but it isn't an inherently outrageous fee under the circumstances.

      Now, if you're wondering why lawyers often charge on the order of $200/hour with a straight face, it's because they have to pay their secretaries, paralegals, bookkeepers, phone bill, LEXIS-NEXIS subscription, malpractice insurance, rent, and, of course, Windows licensing fees. My parents are both attorneys with excellent professional reputations, and fairly thrifty people, but I still have college loans, having already spent many thousands of dollars on tuition out of my own savings. The savings didn't come from gifts or anything like that, they came from working since I was 15. It would be far worse if I had gone to college out of state, but we simply couldn't afford that at all. I don't blame my parents for any of this, because it's not like they've been neglecting me. They're doing the best they can. There's a fairly decent chance that at age 21 I'll have a higher income as a software developer than they do as (very good) attorneys.

      There are certainly lawyers who become quite wealthy from their profession, but most of them end up somewhere in the middle class. If you can think of a way to streamline the legal system to significantly reduce those costs, your lawyer will surely pass the savings on to you. Unlike Microsoft, your lawyer has to compete.
  • by squarefish ( 561836 ) * on Saturday May 15, 2004 @09:41AM (#9160672)
    the company should pay the price of the fines, it should not be turned back to the customers. maybe a price increase is just what's needed to get those thinking about other options to just go out and implement them sooner. sounds like a pretty pathetic plan to me.

    this is just the cost of doing questionable business, and it's not like they can even begin to say 'we didn't know we couldn't do that'. it's just fucking rediculous what these asshats are trying to get away with.
  • by erick99 ( 743982 ) * <> on Saturday May 15, 2004 @09:41AM (#9160673)
    and soon you are talking about some real money. I think they are sitting on about six billion in cash the last I heard. Still, they are looking at losing almost half of that to suits settled and suits pending with no end in sight to the litigation. So, it's not surprising that they will want to recoup some of it. Hey, I'm not saying it's right or that they even need to do it. But, any company that has to eat nearly three billion is going to want to do something. Somewhat relatedly, Pfizer agreed to a half billion this week to the FDA for mismarketing Neurontin and you can bet they will get it back through consumers.

    Happy Trails!


  • Value (Score:4, Insightful)

    by nuggz ( 69912 ) on Saturday May 15, 2004 @09:42AM (#9160676) Homepage
    $3k/hr sounds stiff. But what did he actually provide?
    Would a less expensive lawyer been as successfull?

    I think certain cases can demonstrate what a difference between a good, great and the best lawyers can have.

    Maybe if we had a bit better performance the DMCA wouldn't exist. Maybe OJ would be in jail, who knows.
    But when it is my ass or $$ on the line, I'd want the best, and the citizens of California deserve it too.
  • by DrEldarion ( 114072 ) <[moc.liamg] [ta] [0791uhcsm]> on Saturday May 15, 2004 @09:43AM (#9160680)
    Allright, now I realize you all like to bash MS as much as possible, but from the article: Mr Crew has billed Microsoft just over $3,000 an hour for his own work, as well as more than $2,000 an hour for other lawyers on his team.

    Jesus! I'd object to having to pay that as well.

    Wouldn't it be nice if all that money went towards, you know, the users that were "harmed" instead of to the lawyers?
  • by cperciva ( 102828 ) on Saturday May 15, 2004 @09:43AM (#9160681) Homepage
    RTFA people. Microsoft isn't complaining about the fines (or settlements) here. They're complaining about the plaintiff's legal fees (which they're being required to pay).

    And, quite frankly, I think they have a point. The lawyer who lead the class action lawsuit may be a really good lawyer, but I don't think his time is worth over $3000 per hour.
    • by nuggz ( 69912 ) on Saturday May 15, 2004 @09:54AM (#9160710) Homepage
      I do.
      The lawyer made much more money for his client then he would have cost them had he lost.

      If they had a second rate lawyer, sure he would have been cheaper, but then they might have gotten a fraction of the fine.

    • What's the difference?

      If Microsoft hadn't broken any laws to begin with then there wouldn't have been any legal fees to pay! Correct?
    • The lawyer who lead the class action lawsuit may be a really good lawyer, but I don't think his time is worth over $3000 per hour.

      What isn't listed is how that hourly rate is broken down. Does that include the lawyer appearing in court and sitting in a chair for most of the time? Or does that fee include a research staff of 10 paralegals who research relevant case law? If it's *just* his fee, then I similarly have a difficult time seeing how that is worth the cost. However, one lawyer highly experienced with class action and anti-trust cases would be worth a bunch of lawyers who have limited experience.
    • by DavidBrown ( 177261 ) on Saturday May 15, 2004 @10:02AM (#9160734) Journal
      You have a very good point, but just so you know, it's not as if the plaintiff's lawyers had a contract paying them $2-3k/hour. It was a contingency fee case, which meant that if the case was lost, the lawyers would receive nothing at all.

      Essentially, the lawyers funded the ligitation in return for a piece of the action. This is more or less typical in class action lawsuits where there are many plaintiffs who each have very little in damages. The masses or even the states weren't going to hire lawyers on an hourly basis to fight Microsoft, because it's not worth enough to each of them on an individual basis to take the risk. And if you say "there was no risk", you're kidding yourself. The fees earned by the plaintiff's lawyers (and no, I'm not one of them) don't even approach what the lawyers in the anti-smoking industry class action lawsuits earned.

      The fees in these cases are approved by the judge as part of the class action settlement. The fees are calculated to take into account the money fronted by the attorneys and the risk of losing the case and getting nothing at all. In any particular case, and perhaps this one, the lawyer fees may be too high, but the lawyers here made this case. If it weren't for them, there would have been no case against Microsoft, and no settlement.

    • by fname ( 199759 ) on Saturday May 15, 2004 @10:03AM (#9160738) Journal
      That's silly. I don't think A-Rod is worth $100,000 per game. I don't think Microsoft deserves to earn $10 billion/year. And I don't believe that anyone deserves $1 million for answering a couple questions correctly on a game show.

      However, in our capitilistic society, we don't pay based on how much we think their time is worth. We reward entrepeneurs for taking chances, and we let people earn whatever the market will bear. If this was such a slam-dunk case, another lawyer probably would have filed the suit first, claiming the reward for himself. How much the guy's time is worth is irrelevant in a case like this.
  • My prediction (Score:5, Insightful)

    by njcoder ( 657816 ) on Saturday May 15, 2004 @09:45AM (#9160685)
    Anti trust case gets settled.
    Users get $10 coupon on newest version of windows.
    Newest version of windows price increases due to litigation by $40.
    Two years later, court says "no no no", consumrs get $15 coupon towards new windows.

    They don't get it. The fine is because they over charged people.. They're not allowed to "make it up". They are supposed to distribute that 50bln their hoarding back to the people the stole it from.

  • Take the jump. (Score:3, Informative)

    by Anonymous Coward on Saturday May 15, 2004 @09:46AM (#9160688)
    If you are angry, then this is why you should be uing Linux.

    If you are increasingly interested in Linux, but do not know where to start, grab knoppix.

    Download here [].

    No installation required, try it from the CD and if you decide you want to make the jump to the penguin world,. just run the install to disk program. Best of all, it is free. If you don't have the bandwidth, ask a freind, I have given out over 20 knoppix disks to my freinds, and 15 of them have converted to Linux 100%. Don't forget to checkout Wine and Crossover office, It will help your transition!
  • Oh the irony (Score:5, Insightful)

    by Xpilot ( 117961 ) on Saturday May 15, 2004 @09:47AM (#9160689) Homepage
    OK, Microsoft says its legal bill is too high, so it has to overcharge its customers. But why did it get that legal bill in the first place? From the article:

    "The legal costs are part of Microsoft's settlement for over-charging consumers buying its software in California."


  • by Idou ( 572394 ) * on Saturday May 15, 2004 @09:49AM (#9160694) Journal
    One of the unique aspects of a monopoly is the inelasticity of demand on the price of their products. In other words, MS can change the price of their products and, since they have a monopoly, roughly the same quantity of their products will be consumed. Of course, this is not black and white. They cannot make their products 100 times more and expect the same amount to be consumed (though, I know of some MS shops that would have no choice . . .). However, they can raise their prices much more than probably any other company without having a significant amount of revenue decrease.

    This means that additional costs to Windows can pretty much be passed 100% down to the consumer, and the EU's monetary penalty is really just another form of tax on the consumer. Perhaps we could call it an "excise" tax on windows.

    No, the real way to punish MS is to break up the monopoly and introduce competition, then charge a monetary penalty that cannot simply be passed on to the consumer, because if the new MS enitity/entities were to raise their price so many people would buy the competitions' products that MS would actually experience a decrease in revenue.

  • Well. (Score:3, Interesting)

    by jellomizer ( 103300 ) * on Saturday May 15, 2004 @09:51AM (#9160699)
    Do they really understand why there are laws?

    No. Plus they have a cash reservers that can last them 5 years of $0 in sales. they can easily eat it up. It is more of a scare tactic to prevent the states from doing it again. In fear if they do it again then then they will need to rase prices again. This does really hurt consumers in many levels including people who wish to purchase commercial distributions or linux, What business like to do is keep their prices no more then half of their competiors prices, so when Microsoft sells XP for $250 its competiors like Apple and the Linuxs will sell it for $125. If Microsoft sells it OS (like back in the good old days) for $80 Apple and the Linux's would sell for $40. The problem is that there are to many Supid consumers out there combined with their fear of computers. Makes this worse. People see something expensive they think "gee it must be good" and then they see how many people are using the product then they go "Well if everyone else is using is then it must be good" While the minority who actually knows economics and goes well I see that everyone is using it so demand is up so the price will rise, no mater what the quality is. So I will look for a product that is just as good but is not much in demand then buy that because it will be cheaper. Popularity and Price have nothing do with the quality of the products. If everyone went to Microsoft your prices are to high we will switch to an other os unless you lower your cost. Then Microsoft will lower its cost no mater how many states are suing them. Microsoft is working with a 20's mob mentality, with out perhaps the drugs and murdering.
  • Simple (Score:3, Interesting)

    by mfh ( 56 ) on Saturday May 15, 2004 @09:52AM (#9160705) Homepage Journal
    Darwin said it best. Microsoft has to compete or they're dead in the water. They can't compete if they jack up their prices. The MS mentality is to offset court expenses with product prices, but that road is mined heavily. They should know better than this, really. Oh wait... nevermind.
  • by cyber_rigger ( 527103 ) on Saturday May 15, 2004 @09:55AM (#9160715) Homepage Journal

    for time wasted for reboots ?

  • by Kjella ( 173770 ) on Saturday May 15, 2004 @10:00AM (#9160732) Homepage
    ..should be able to see through that argument. They took monopoly profits before, they take monopoly profits now. Sunk costs like legal bills have absolutely no effect on the optimal price/quantity point. It only comes into play if there's competition.

    This is simply trying to shift the blame of why they're extracting monopoly profits: "Damn M$, stop bleeding us dry" to "Damn justice department, stop suing them so we don't pay the bill". When in reality, they would have taken that money anyway, because they can.

  • by Attila ( 23211 ) on Saturday May 15, 2004 @10:02AM (#9160736)
    Their objective TCO studies will still show Windows is cheaper than Linux.
  • by starfire-1 ( 159960 ) on Saturday May 15, 2004 @10:04AM (#9160746)
    I'm amused at the outraged postings of people shocked by the fact that Microsoft passes along settlement costs to the consumer through price increases rather than cutting into their profits. Look, they'll raise their prices first, and if demand drops off or they're afraid that their market share is shrinking, then they may lower their prices again.

    Litigation resulting in cash penalities are the easiest for corporations like MS to handle. I believe that state and foreign governments sue not for whats "right" or "fair" but because its a backdoor method of taxing the public.

    IMHO, the best solution to deal with MS was the original penalty of splitting the OS and Apps segments of MS into two separate entities. You can't pass that along to consumers. No wonder MS fought so hard to get that reversed.

    BTW - Here's another little fact. Corporations don't pay taxes (technically) either. So before getting all huffy that MS is getting away with it again, take a good hard look at the runaway litigation in the world and ask yourself where all of the money is going!
  • Monopoly (Score:3, Insightful)

    by AlexEdwards ( 777214 ) on Saturday May 15, 2004 @10:06AM (#9160758)
    The fact that Microsoft can nonchalantly pass on these costs to the consumer with litte concern for its loss of market share shows how much of a monopoly they truly are, and how much they know it to be so. When an pattern of existence dominates an environment so completely, "evolution" ceases to be an issue - short of cataclysmic or revolutionary change.
  • This whole idea reminds me of something I see all of the time -- people supporting a government program, but not realzing that someone has to pay for it. For example, here in Florida, voters a few years ago backed a bullet-train overwhelmingly, not realizing that the money for such a train had to come from somewhere. We enjoy no income tax here, so it comes in the form of higher sales or property taxes, which affect us all.

    On the same vain, everyone cheers when Microsoft gets whacked with a big judgement or settlement. But, the money has to come from somewhere -- and it will likely come in the form of higher prices. And since 90% of desktops run Windows, it will likely affect you in some manner down the road.

    With that said, the attorney's fees in this case (and many others) are outrageous. The judge for set them more modestly.

  • by nlinecomputers ( 602059 ) on Saturday May 15, 2004 @10:07AM (#9160762)
    This is an example of how fucked up our laws are requarding businesses. This isn't a Microsoft is evil example this is a basic corporate fact and is an example why corporations exist. Corporations are by design intended to protect individuals(the owners ) because the only thing you can do to a corporation is take it's money and as it job is to make money it will simply treat such an event as a loss of profit and it will react as such. If other operating costs go up then that would effect the price too. The only way you are going to change corporate behavior is by holding those in charge responsible for it's acts not the corporation. Except for a corporate charter many actions could be tried under conspiracy or even racketeering laws but that corporate charter insulates the owners from that. Change incorporation laws and this would stop.
  • Remember when... (Score:3, Interesting)

    by HangingChad ( 677530 ) on Saturday May 15, 2004 @10:09AM (#9160770) Homepage piracy was costing honest users billions of dollars and product activation was going to fix all that.

    Consumers to the burden of proof, added their personal information to the cost of using MSFT's software, and software prices went down across the board, right? Quite the contrary, you now get the burden of proof, a hoop you have to jump through every time you change hardware, AND higher prices.

    Hey, as long as the MSFT sheeple keep taking it up the pooper you can't get mad because Redmond takes advantage of the situation.

    Just got done isolating the last Windows machine on my network so it can't access the Internet. That's a Win2K box. The last piece of MS crapware I purchased at home since...2001. Wow, time flies when you're having fun instead of spending all you time patching Windows.

    And I have to say it feels good when stories like this and the virus of the day come by. Not that I'd ever taunt the sheep by saying something like NEENER, NEENER, NEENER. And though I might be tempted to think they're technology LOOOOOOSSSEERRRS, manners would prevent me from saying so out loud. Instead I'd pretend to be sympathetic and understanding and wait until their back is turned and they're a polite distance out of earshot to start laughing.

  • by _iris ( 92554 ) on Saturday May 15, 2004 @10:10AM (#9160772) Homepage
    I would consider this to be "abusing their monopoly power." Shouldn't the law consider it the same, thus allowing the DoJ to bring another anti-trust suit?

    Oh wait... Bush would just quash this one like he did the last.
  • Oh the hypocrisy! (Score:3, Insightful)

    by ipl me asap ( 777203 ) on Saturday May 15, 2004 @10:11AM (#9160777)
    So, this guy just "wins" a case against someone for price gouging... then turns around and price gouges, but that's ok, becuse it's MS he's doing it to... Toss this one in the blindly biased bucket.
  • by Cytlid ( 95255 ) on Saturday May 15, 2004 @10:13AM (#9160783)
    ... they would push to make sure the majority of the "benefit" would go back to end users. But that wouldn't serve their purpose. After reading the article and a million different posts... they're just angry about having to pay their opponents' lawyer's fees. Hey, I would be too.

    Not that I care for MS or their tactics, but isn't it a bit sad? If there are 13 million Californians who are going to recieve the benefit, a $10 coupon would not cut it. That gives you $130 million to the end users and $260 to the prosecuting lawyers. Looks like they'd have to double it... the saddest thing is that the big winners in all this are the lawyers and not the people.
  • Funny (Score:3, Funny)

    by Epistax ( 544591 ) <epistax&gmail,com> on Saturday May 15, 2004 @10:13AM (#9160785) Journal
    I blame Microsoft on Microsoft price increases.
  • by telstar ( 236404 ) on Saturday May 15, 2004 @10:14AM (#9160786)
    It seems like a lot of people here think that passing along the expense to the user is unfair. These are the same people that are proponents of Linux. Do the math ... Windows costing more means that there will likely be fewer users of Windows because they can't afford it in their or their company's budget. Anyone that pushes Linux over Windows should be HAPPY that the cost is being passed onto the users.
  • by tiny69 ( 34486 ) on Saturday May 15, 2004 @10:14AM (#9160787) Homepage Journal
    1: Run other companies out of business and become a monopoly
    2: Profit
    3: Get sued for Anit-trust violations
    4: Pass legal fees and damages on to the customer
    5: Profit
    6: Have customers sign up for free software upgrade license agreement for large $SUM
    7: Release new software AFTER said agreement expires
    8: Profit
    9: Extend, Embrace, . . .

    How do I get in on this?
  • by mcc ( 14761 ) <> on Saturday May 15, 2004 @10:34AM (#9160917) Homepage
    That out of all of Microsoft's business costs, the only ones "somebody has to pay for" are the legal costs with the government.

    For example, wouldn't it make more sense to point at the approximately three hundred million dollars per quarter that Microsoft has been pissing away on the XBox venture since it began with no apparent plan to move to profitability in sight, and say that perhaps that is the cause of the cost increases? Or what about the MSN division, which last I checked has run very slightly profitable for only one quarter (sometime last year) once with only losses for the entire rest of its entire history? Or-- say-- Windows Media Player? Microsoft's giving it away but there's clearly development costs. Doesn't someone have to pay for that?

    It seems absolutely bizarre that Microsoft seems to be trying to make the implication that ventures such as the original IE, or Windows Media Player, really are "free", and just attempts to "stay competitive", and the fact they have all this money from their OS and Office divisions doesn't give them any unfair advantage. Yet then once it becomes advantageous from a PR perspective to do so, they begin trumpeting about how all their costs get passed on to consumers. Well, gee! If the costs of doing business are getting passed on to consumers, then aren't the development costs for IE and WMP being passed on to consumers as well? And if IE and WMP are being paid for via costs passed on to the people who buy Windows, then why does Microsoft claim that these are anything other than forced bundling? Why the "it's free" charade that seems to be the basis of their claim that IE and WMP aren't illegally anticompetitive actions?

    I'd say the costs passed on to consumers from Microsoft paying slap-on-the-wrist fees for monopolistic practices are dwarfed by the costs passed on to consumers from Microsoft actually engaging in monopolistic practices in the first place.
  • by pandrijeczko ( 588093 ) on Saturday May 15, 2004 @10:38AM (#9160957)
    The real issue here is not the price increases as they stand - it's basically the fact that it's a message from Microsoft to its customers, essentially saying to them "Use your influence to stop the government hassling us or we'll make you foot the cost of any legal action."

    The fact is the MS is in a position that most other corporations would love to be in - not simply just being a monopoly but actually dictating to it's customers whatever it likes, rather than in most other industries when the customer has the power of choice and some influence over product pricing.

    Whether this is good for Linux or not is irrelevant - the fact is that the user base MS has is no longer a customer but a dependant in the same way a drug addict needs a dealer - in other words, customers taking some control and forcing MS's hand.

    What this needs is a few big MS customers to simply refuse to pay those license fees and to stop upgrades (and no, I'm not talking about just moving to Linux) - then there is some likelihood of vesting power back into the customers' hands such that MS products are bought based on their quality and pricing, rather than just because they are depended on.

    It is very dangerous to allow a corporation to have this much influence & power over its customers - if the customers just "lay down and die" now, then this kind of event will happen more frequently as MS gets more confident in its bullying tactics. This will get *much* worse unless people start acting now.

    Incidentally, before anyone accuses me of Linux zealotism, my attitude always has been that Linux's continued success should be based on the postivie aspects of delivering what people want rather than MS negativity forcing people to migrate to it.

    In this case, migration to Linux is an option but hitting MS in its corporate wallet is what is needed to counter this action - users should just continue using the MS software they have and not upgrade. Corporate users should look at the licenses they have a maybe start cutting back on Office licenses, possibly handing out Open Office to users who don't need the full capabilities of MS Office.

    These are actions that can be taken that will not necessarily affect the user environment greatly but that will send a message to MS that the bullying must now stop.

  • by Greger47 ( 516305 ) on Saturday May 15, 2004 @11:02AM (#9161130)
    'Somebody ends up paying for this,' said Microsoft attorney Robert Rosenfeld. 'These large fee awards get passed on to consumers.'

    Doesn't matter if its Microsoft or any other corporation, the costs of punishment ALLWAYS end up in the lap of said companys customers one way or another.

    The only thing that's effective is either fine (or jail if appropriate) the owners of the company or force a liquidation, anything else is just a strike in the air.


  • Yes Massa! (Score:3, Interesting)

    by edunbar93 ( 141167 ) on Saturday May 15, 2004 @12:32PM (#9161669)
    Why does this remind me of a sweatshop mentality?

    "Anyone who reports of abuses in this shop will be beaten severely!"
  • by Snork Asaurus ( 595692 ) on Saturday May 15, 2004 @12:34PM (#9161686) Journal
    Article Poster asks: Do they really understand why there are laws?

    Laws are for controlling the common folk.

    I'm not sure exactly who the "they" is in your question, but this default case covers most situations:

    In this supposedly enlightened age, as the roots of globalization branch, grow and strengthen and nations install governments that are little more than paid operatives of corporations, said corporations develop a sense of omnipotence and the companion view that laws that do not work in their favor are mere repairable obstacles on the road to greater corporate wealth; an artifact of a less enlightened time that can be removed with the judicious application of money and, until they are removed, the penalties for the violation of which are entered into ledgers as just another "cost of doing business" that will ultimately passed on to the consumer. The sad, albeit anthropological, fact is that since greed and vanity are key characteristics of most politicians, many politicians are happy to accept deferred positions on that road repair crew in exchange for assistance in their appointment. They may end up repairing the road to hell, but that is irrelevant to them since they probably won't be around to see it completed and would likely never be held accountable for the impact of their work, since they tend to control the formation of laws that would hold them accountable.

    So, to answer you question: to many corporations, understanding why there are laws is moot. They understands very effective means to deal with them. Among the those means:

    1) Affix a surcharge to the cost of all goods

    2) Return a small portion of that surcharge to people in positions to influence laws and treaties to the corporations' benefit

    3) Profit. ;-)

  • BULLSHIT (Score:3, Insightful)

    by Bob9113 ( 14996 ) on Saturday May 15, 2004 @01:11PM (#9161931) Homepage
    'These large fee awards get passed on to consumers.'

    I've heard this one before, and it makes me (as an armchair economist) absolutely livid. There is absolutely no correlation between Microsoft's cost of production and their market price. The idea that legal fees and fines or taxes get passed on to consumers is only true in competitive markets with a limited supply of the goods in question. Microsoft is selling a product with zero marginal cost (after producing the first copy of a new version of windows, each additional copy has effectively zero cost) in an extremely non-competitive market. Cost of production has absolutely nothing to do with their market price - it is determined entirely by the demand side.
  • by serutan ( 259622 ) <snoopdoug AT geekazon DOT com> on Saturday May 15, 2004 @01:30PM (#9162026) Homepage
    That's how business works, folks. It's just like conservation of matter, energy and momentum. When costs go up, the money to pay for them has to come from somewhere, and a corporation's money ALL comes from its customers. It doesn't matter if the reason is material costs, rents, interest rates, criminal fines, whatever.

    Look what happened after the great, historic, multi-billion dollar tobacco industry settlement. The price of cigs went up, that's all. After politicians stopped blowing their trumpets of victory, everything was the same except the government was making more money from smokers.

    In principle a company loses market when it has to raise prices, but for Microsoft this probably isn't the case any more than it was for Phillip Morris. Millions of people already buy software from Microsoft, even though the equivalent is available for free. Are they going to switch because it gets a little more expensive? Probably not.

    This is a good argument for penalizing corporate executives personally for their business decisions instead of letting them hide behind the corporate shield. Think about this when politicians talk about taking the tax burden off the individual and putting it on wealthy corporations. It's a smoke screen. They all get their money from the same place: you.
  • by Doc Ruby ( 173196 ) on Saturday May 15, 2004 @01:44PM (#9162103) Homepage Journal
    This swindle shows the central problem with M$ monopoly crime: corporate liability protection. Properly administered, monopoly crimes would be remedied and punished at the corporate level, directors and owners, as their decisions (active and passive) caused the damage (and continue to do so). But the corporation construct protects them. So they pass the costs along to their customers. As a monopoly, their customers can't just switch to the competition.

    Even though Ashcroft's Justice Department and Bush's FTC have obviously given a pass to M$, exactly their kind of corporation, they're just the sizzle on the rotten steak of the original penalty judgement. The only remedy to a monopoly corporation is to destroy the monopoly. M$ should have been split into its vertical components: OS, development tools, applications, media, and consulting. Probably some of those components should have been split into directly competing companies: .NET vs. VisualStudio, Office vs. Works, Consulting 1, 2, 3. Decimating the company would have unleashed value for everyone, including ginormous shareholders like Gates and Ballmer, who would see the combined value of their parts grow more quickly than the monolithic entity. But their personal power, which chokes the industry and its dependent markets, would be diminished. And a model would be installed for killing these giant krakens before they strangle us with their endless tentacles. Instead, we are dragged to the maelstrom.
  • by kma ( 2898 ) on Saturday May 15, 2004 @01:47PM (#9162122) Homepage Journal
    IANAEconomist, but all of the folks saying, "It's econ 101! In competitive industries, companies can't change prices, MS is warning that they're going to change prices, ergo they're a monopoly!" should be aware that economics has retreated from this simple "price setting" == "monopoly" claim since the 1930's. Now, it so happens that microsoft really is a monopoly. However, the fact that there is some elasticity in their pricing doesn't prove it.

    By the "economics 101" definition, common sense tells us that very very few modern industries are "competitive," because in almost all real industries, companies have pricing power. E.g., Nike is not a monopoly, but they obviously have a lot of latitude in how they price their shoes.

    The classical market model, wherein producers have absolutely no control over the prices of their products, was a great model for the mercantile systems of the 18th and 19th century, when they were developed. If you're a cotton planter, or molasses distributor, or lumber baron, etc. your production accounts for a small enough fraction of available goods that you really can't effect prices at all; you have no choice but to take the going price.

    Very few modern industries fit this model, in part because not many modern industries involve true commodities; there's always some difference between McDonald's and Burger King that's important enough to some consumers that they'll pay a bit extra for their favorite. But also because most industries have a few behemoth leaders that are responsible for most of the production. But even for chemically identical commodities like steel and salt, companies end up having pricing power because so few companies account for so much of the production. In the US, if C&H stopped selling sugar, there would be a noticeable "sugar crunch"; this effectively gives C&H an ability to price sugar, since consumers can't credibly threaten to just get all their sugar somewhere else.

    (Been reading Galbraith on my AM commute lately. Would genuinely appreciate any real econ types smacking me down.)
  • by wardk ( 3037 ) on Saturday May 15, 2004 @02:28PM (#9162336) Journal
    Gee, no room in the 80% margin to cover the costs incurred establishing those same margins.

    life sucks being them
  • command and control. (Score:4, Interesting)

    by Snafoo ( 38566 ) on Saturday May 15, 2004 @02:49PM (#9162433) Homepage
    Basically, Microsoft is so entrenched now that they can dictate terms to governments by threatening economic slowdowns, and hence, poor showings on election day.

    Essentially, Microsoft now has enough economic power to also possess de-facto political power.
  • by rben ( 542324 ) on Saturday May 15, 2004 @03:24PM (#9162604) Homepage

    A company that is convicted of being a monopoly can't be sued into behaving. It has to be dismantled. This is a perfect example of why that's the case.

    The fines that are awarded, alternatively, could be secured by seizing the companies assets and either placing them in the public domain, where IP is concerned, or auctioning them to pay some recompense to the people hurt by the company. But even so, if you leave the company intact, it will just do the same thing again. I know of no example of any monopolistic company giving up it's bad behavior if it could continue to break the law and still make a profit.

Help! I'm trapped in a PDP 11/70!