Microsoft Faces Multibillion-Pound Legal Challenge Over Software Licensing Practices

Microsoft Corporation, the world’s largest software company, is confronting one of the most significant legal challenges in its recent history as a multibillion-pound class action lawsuit has been filed against the tech giant in the United Kingdom. The case, which could potentially affect millions of UK consumers, businesses, and public bodies, centers on allegations that Microsoft has systematically abused its market dominance through restrictive licensing practices that have artificially inflated software prices since 2015.

The Heart of the Legal Challenge

The opt-out class action claim, filed by experienced barrister Alexander Wolfson, represents what could become one of the largest competition law cases ever pursued in the UK [1]. The lawsuit alleges that Microsoft has engaged in anti-competitive conduct by restricting competition between new software licenses and pre-owned licenses for its products, effectively manipulating the secondary software market to maintain artificially high prices.

The case specifically targets Microsoft’s licensing practices for its most widely used products, including Microsoft Office and Windows operating systems, covering the period from October 1, 2015, to the present day [2]. According to the legal filing, Microsoft’s conduct has “affected and inflated the prices of both new licenses and pre-owned licenses,” creating a situation where UK customers have been systematically overcharged for essential software products.

Alexander Wolfson, a barrister with more than 25 years of experience who previously served as a Crown Advocate and District Crown Prosecutor, is leading the charge as the proposed class representative [3]. His legal team includes specialists from Stewarts Law, one of the UK’s leading competition litigation firms, with counsel teams from both Monckton and Matrix Chambers providing additional expertise.

Microsoft’s Alleged Anti-Competitive Practices

The core allegations against Microsoft center on the company’s approach to software licensing and its treatment of the secondary market for software licenses. According to the legal claim, Microsoft has implemented restrictive licensing practices that effectively prevent customers from freely reselling their existing software licenses, while simultaneously steering them toward subscription-based models [4].

Kate Pollock, head of competition litigation at Stewarts Law, explained the significance of these practices: “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. We believe that Microsoft abused its market dominance by imposing restrictive licensing practices that effectively shut down competition and inflated prices” [5].

The lawsuit suggests that Microsoft’s strategy has been to limit the supply of pre-owned licenses in the market, thereby reducing competition for its new license sales. This approach allegedly allows the company to maintain higher prices across both new and second-hand software markets, creating a situation where customers have fewer alternatives and face inflated costs regardless of which licensing option they choose.

A Pattern of Legal Challenges

This latest legal action represents just one of several ongoing disputes regarding Microsoft’s licensing practices in the UK. The current case bears similarities to a 2021 lawsuit filed by UK reseller ValueLicensing, which sued Microsoft for £270 million over claims of restrictive contractual practices and alleged abuse of dominance [6]. That case, which is still ongoing, focused on allegations that Microsoft steered customers toward subscription models while restricting them from selling their existing licenses.

Additionally, Microsoft is facing another significant legal challenge in the UK, with a separate £1 billion collective action filed in 2024 alleging that the company overcharged Windows Server customers who chose to use competing cloud platforms rather than Microsoft’s Azure service [7]. This case suggests a broader pattern of alleged anti-competitive behavior extending beyond traditional software licensing into cloud computing services.

The pattern of legal challenges extends beyond the UK, with the Cloud Infrastructure Providers in Europe (CISPE) organization filing a complaint against Microsoft with the European Commission in 2022. While CISPE later withdrew its complaint after receiving a settlement from Microsoft, the organization has indicated that the dispute might resume if Microsoft fails to deliver on its commitments [8].

Microsoft’s Defense and Industry Response

Microsoft has firmly rejected the allegations in the current class action lawsuit. In a statement to The Register, a Microsoft spokesperson said: “This new collective action is based on the same unsubstantiated claims regarding second-hand software licensing that have been litigated for several years in another case. Microsoft believes these claims are meritless and will vigorously defend against them” [9].

The company’s response suggests that it views the current lawsuit as an extension of previous legal challenges rather than a novel set of allegations. Microsoft’s legal strategy appears to focus on characterizing the claims as unsubstantiated and emphasizing that similar allegations have been contested in other ongoing litigation.

Implications for the UK Digital Economy

The case has attracted significant attention from legal and technology industry observers, with litigation funding firm Harbour providing financial backing for the lawsuit. Ellora MacPherson, Managing Director and Chief Investment Officer at Harbour, described the case as “likely to be one of the largest the UK has seen” and emphasized its importance as “an example of how big corporate entities can be held to account” [10].

The potential implications of this case extend far beyond Microsoft itself, as it could set important precedents for how competition law applies to software licensing practices in the digital economy. With billions of pounds potentially at stake, the outcome could influence how other major technology companies structure their licensing agreements and pricing strategies.

For UK consumers, businesses, and public bodies, the case represents an opportunity to recover potentially significant overcharges on software licenses purchased over nearly a decade. The opt-out nature of the class action means that eligible parties are automatically included unless they specifically choose to exclude themselves, potentially maximizing the number of affected customers who could benefit from any eventual settlement or judgment.

Looking Forward

As this legal battle unfolds, it will likely provide important insights into the balance between protecting intellectual property rights and preventing anti-competitive practices in the software industry. The case also highlights the growing scrutiny that major technology companies face regarding their market dominance and pricing strategies.

The establishment of a dedicated website, MicrosoftClaim.co.uk, to inform potential class members indicates the serious intent behind this legal challenge and the expectation that it will proceed through the UK’s legal system [11]. With experienced legal teams on both sides and significant financial resources at stake, this case is likely to be closely watched by competition law experts, technology industry participants, and consumers alike.

As the UK continues to develop its post-Brexit competition law framework, cases like this one may play a crucial role in defining how British courts and regulators approach allegations of anti-competitive behavior by global technology giants. The outcome could have lasting implications for the UK’s digital economy and the rights of software users across the country.

References

[1] Stewarts Law. “Claim issued in multi-billion pound UK class action case against Microsoft.” May 14, 2025. https://www.stewartslaw.com/news/claim-issued-in-multi-billion-pound-uk-class-action-case-against-microsoft/

[2] Yahoo News UK. “Microsoft facing multibillion-pound legal claim over software licence pricing.” May 13, 2025. https://uk.news.yahoo.com/microsoft-facing-multibillion-pound-legal-094350208.html

[3] MicrosoftClaim.co.uk. “About Us.” https://www.microsoftclaim.co.uk/about-us/

[4] The Register. “Microsoft facing legal claim over how it sells software.” May 13, 2025. https://www.theregister.com/2025/05/13/microsoft_licensing_lawsuit/

[5] Stewarts Law. “Claim issued in multi-billion pound UK class action case against Microsoft.” May 14, 2025.

[6] The Register. “Microsoft facing legal claim over how it sells software.” May 13, 2025.

[7] The Register. “Microsoft facing legal claim over how it sells software.” May 13, 2025.

[8] The Register. “Microsoft facing legal claim over how it sells software.” May 13, 2025.

[9] The Register. “Microsoft facing legal claim over how it sells software.” May 13, 2025.

[10] Stewarts Law. “Claim issued in multi-billion pound UK class action case against Microsoft.” May 14, 2025.

[11] MicrosoftClaim.co.uk. “Frequently Asked Questions.” https://www.microsoftclaim.co.uk/faq/