Microsoft Slapped With XP Downgrade Rights Suit

The plaintiffs in a class action suit filed earlier this week in Seattle federal court claim that Microsoft acted illegally by forcing customers to buy new Vista PCs in order to get XP. Downgrade rights allow customers who buy new PCs with Vista Business or Vista Ultimate to revert back to XP Professional.

Los Angeles resident Emma Alvarado -- on behalf of all U.S. residents who bought a Vista PC and paid to downgrade it to XP -- is charging Microsoft with anticompetitive behavior and is seeking treble damages for the financial impact of Microsoft's actions.

Last June, Alvarado bought a new PC from Lenovo that came with Windows Vista Business preinstalled. Alvarado claims she was required to pay an additional $59.25 to downgrade from Vista to Windows XP. The filing doesn't specify whether Lenovo or Microsoft levied that fee.

However, according to the filing, Microsoft initially charged customers $104.00 for the downgrade option and gave OEMs until June 30, 2008 to offer downgrade rights. But Microsoft reaped such "tremendous profits" from the downgrade option that it decided to extend the deadline on two occasions: First, to Jan. 31 of this year, and later, to the current date of July 31.

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"To date, nearly one in three consumers purchasing a new computer has paid to downgrade the operating system from Vista to Windows XP," according to the filing. Microsoft has yet to be served with the lawsuit and a spokesperson said it would be premature to comment on the case.

However, Microsoft's position is that downgrade rights -- which are part of the Vista EULA -- are simply an option the company offers to OEMs, and the spokesperson denied that Microsoft benefits financially when customers use downgrade rights.

"Microsoft does not charge or receive any additional royalty if a customer exercises [downgrade rights]. Some customers may choose or need to obtain media or installation services from third parties to install the downgrade version," the spokesperson said.

On July 31, Microsoft will stop providing the media for downgrades to OEMs. Customers will still be able to access their downgrade rights after that date by contacting Microsoft, but the company hasn't been specific about how that process would work.

Incidentally, some of the legalese in the complaint sounds like it was copied verbatim from recent EU filings.

"As the sole licensor of Windows Vista, Microsoft enjoys vast power over OEMs, which it has used and continues to use to stifle competition ... Since the introduction of Vista, Microsoft has effectively eliminated competition in the operating system PC market and created a monopoly position for itself in that market. "

While this case doesn't appear to be as strong as the scandalous 'Vista Capable' debacle, it's another bit of evidence that Vista's legacy will probably take decades to erase from the annals of Microsoft history.