- According to a fresh new report, a UK software reseller company sues Microsoft for £270m
- ValueLicensing say Microsoft is abusing its power over second hand software licences
- The Redmond giant is being accused of having “stifled the supply of preowned licences”
According to a freshly released report from the FinancialTimes, it seems that Microsoft could soon be in some serious trouble.
ValueLicensing, a re-owned software reseller company, based in East Midlands, UK, has filed a claim in the High Court in London against Microsoft. The UK company accuses Microsoft of having abused its dominant market position.
In its High Court lawsuit, the company is demanding that Microsoft’s clauses are ruled “illegal and enforceable”. Furthermore, it seeksfor the NDAs to removed from contracts, as well. The company says that non-disclosure agreements have “eliminated most preowned licences from the market”:
“Microsoft’s illegal behaviour has impacted almost every organisation that provides desktop software for its workforce in the UK and the EEA.
ValueLicensing is not the only victim. In purchasing software, public and private-sector organisations presently have little option but to move to subscriptions offered by Microsoft, because there are so few preowned perpetual licenses available now, as a result of Microsoft’s campaign to almost entirely drain the market.
Microsoft is an unavoidable partner. Its software is integral to virtually all organisations. Its position of economic strength enables it to prevent effective competition from being maintained for preowned perpetual licences because it has the power to behave to an appreciable extent independently of its competitors and taxpayer-funded public-sector organisations and private-sector businesses of all sizes.”
ValueLicensing’s business consists in buying pre-owned Microsoft software licenses from companies that have either upgraded their IT or became insolvent. Once it does that, it is then reselling them across the UK and Europe.
According to the company’s About page, it helped clients save millions:
We’re experts at buying and selling legal and fully compliant pre-owned Microsoft volume licences across their entire product range. Since 2009, we’re proud to have been empowering the public and private sector across Europe with savings of up to 70%* on their software licences.
To date, we have supplied pre-owned Microsoft volume licences to thousands of companies and organisations ranging from SMEs to large multi-nationals with over 350,000 employees. In doing so, we have helped our clients make impressive and ever-increasing savings, totalling in the millions. We look forward to doing the same for you.
It’s quite obvious that this kind of business could potentially pose a threat to Microsoft. First of all, you have the companies that sell their current licenses and no longer renew them and then you have other companies which, instead of paying a full price, get a way better offer from companies like ValueLicensing.
After all, all pre-owned licenses are guaranteed to work and the single difference is the price. So smart companies are definitely resorting to this strategy; not to mention startups.
Jonathan Horley, ValueLicensing’s founder, had to say the following in an interview with FT:
“Microsoft has an incentive to move to its new cloud-based model and remove the old licences from the market so customers have no choice but to move to its subscription model”
According to him, Microsoft is persuading companies to give up their ongoing license in exchange for such tools as Office 365. By doing so, Microsoft is allegedly harming competition in the used software.
Horley says that because of this companies can no longer save money, being somehow forced to swap to other tools. He went as far as to say that Microsoft is “abusing its power” with this practice, contributing decisively to the shrinkage of the resale market.
As always, Microsoft said it was “unable to comment on ongoing legal cases”.
When it comes to the actual losses, the British reseller claims it has lost a whopping £270m in gross profit since 2016. It seems that most of this profits came from the sales of desktop products.
Image Source: EastMidlandsBusinessLink