Microsoft monopoly costs consumers, 2 groups allege Prices of its software too high, report says

Computer industry

October 08, 1998|By BLOOMBERG NEWS

WASHINGTON -- Microsoft Corp. sells overpriced operating systems to U.S. consumers, using its monopoly to raise the price of its software, a report by two consumer groups said yesterday.

The Redmond, Wash.-based maker of the Explorer Internet browser and Microsoft Windows operating system -- the software that runs most of the world's personal computers -- sells home PC operating systems for two to three times the cost of other systems, said a study by the Consumer Federation of America and the Media Access Project.

Microsoft, the world's largest software company, also overcharges for its Office package of computer programs used by companies, charging $125 to $190, while other applications sell for $10 to $15, the report said.

The two groups sent a letter to Congress urging lawmakers to consider greater regulation of the software industry.

"Only by conclusively and permanently banning Microsoft's practices can impediments be driven out of the software industry and prevented from spreading into the much broader and more important realm of electronic commerce on the Internet," the letter said.

It urged Congress to "engage in vigorous oversight and, if necessary, consider legislation that will promote greater competition in the computer software industry."

More than 90 percent of the world's PCs use Windows, and the U.S Department of Justice and 20 states say Microsoft has tried to crush possible competition for Windows' monopoly, violating antitrust laws.

There are an estimated 36 million PC owners in the United States, and they spend as much as 13 percent of their PC's cost for its operating system, up from 3 percent in 1990, according to the report.

The price of many popular Microsoft programs has dropped in recent years, and the company's Windows operating system sells for less than many competitors, said Microsoft spokesman Tom Pilla.

Windows, which sells for $89, costs $10 less than Apple Computer Inc.'s Macintosh operating system, and the price of Microsoft's Office software package has dropped 50 percent over eight years, Pilla said.

"This report is a rehash of tired, old allegations by our competitors and critics," he said.

Pub Date: 10/08/98

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