Microsoft Faces Major UK Class Action Over Software Licensing Practices

Microsoft is under legal scrutiny in the UK, facing one of the country’s largest class action lawsuits concerning its software licensing strategies. The lawsuit alleges that Microsoft has abused its market dominance by imposing restrictive licensing practices, leading to inflated prices for consumers and businesses. 

Allegations of Market Abuse

The core of the lawsuit centers on claims that Microsoft restricted competition by limiting the resale of pre-owned software licenses, particularly for its Office and Windows products. This practice allegedly forced customers to purchase new licenses at higher prices, eliminating more affordable alternatives and stifling market competition. The legal action, led by barrister Alexander Wolfson, seeks to hold Microsoft accountable for these practices and secure compensation for affected parties. 

Kate Pollock, head of competition litigation at Stewarts, emphasized the lawsuit’s significance: “Microsoft’s conduct has had a profound and costly impact on millions of individuals and private and public sector organizations that rely on its software for daily business operations.”  

Broader Regulatory Concerns

This lawsuit is not an isolated incident. In late 2024, Microsoft faced a £1 billion lawsuit over claims that it charged higher licensing fees for Windows Server when used with rival cloud platforms like AWS and Google Cloud, compared to its own Azure service.  Additionally, the UK’s Competition and Markets Authority (CMA) has been investigating Microsoft’s software licensing practices, particularly concerning their impact on competition in the cloud computing market.  

In the United States, the Federal Trade Commission (FTC) has initiated a broad antitrust investigation into Microsoft’s business practices, including its software licensing and cloud computing operations.  

For organizations, these legal challenges underscore the importance of vigilant software asset management (SAM). The complexity and opacity of software licensing agreements can lead to unforeseen costs and compliance risks. Tools and services that provide clarity and oversight into software licensing are becoming increasingly vital. 

As the legal landscape evolves, organizations must stay informed about changes in licensing practices and regulations. Proactive SAM strategies can help mitigate risks associated with licensing disputes and ensure compliance with current laws and agreements.

The outcome of this lawsuit could set a precedent for how software licensing practices are regulated and enforced, potentially leading to more transparent and fair licensing models in the industry.