Infraserv has lodged a complaint with the New Zealand Comerce Commission, alleging that recent changes to Microsoft's product licensing arrangements, encompassed in Software Assurance, are anti-competitive and contravene New Zealand commercial laws.
According to Microsoft, alterations to the software licence scheme, announced last May, represent a change from a conventional upgrade model of licensing to 'software-as-a-service'.
Instead of buying a product and having the option upgrade to a newer version of the product at a reduced price, Microsoft's Software Assurance requires customers to purchase the right to upgrade for two years at the time of purchase. The contracts are charged at the rate of 29 percent of the list price of the product, per year.
Infraserv, IT provider to New Zealand law firm Clendon Feeney, claims the new model simply forces customers to purchase upgrades that were optional under the old scheme. "Upgrades are common industry practice to the extent that the custom is an expectation of customers at the level of an implied term," the company said.
According to Infraserv, customers could find themselves paying 58 percent of the original list price of a product for the right to install bug patches and service releases. It claims the licence scheme contains no service guarantee levels and, therefore, no guarantee that users will receive a 'major' upgrade within the term of the contract.
As a result of the complaint the New Zealand Commerce Commission has been asked to investigate Microsoft for anti-competitive practice on the grounds that Software Assurance "deters entry and competitive conduct" in the global software market.
Infraserv contends that should Microsoft fail to provide a major upgrade in a two-year cycle, customers will move to protect money already invested in Software Assurance investment by re-purchasing their licence.
"The result could be that competition in the affected markets may then be restricted, prevented or deterred for up to at least four years," according to Infraserv.
The Commerce Commission has also been asked to assess whether Microsoft is meeting its obligations as dominant supplier of intellectual property under the General Agreement on Tarrifs and Trade, to which New Zealand is a signatory.
On behalf of its US parent, Microsoft New Zealand today issued a statement in response to the situation. The company said that it is trying to simplify its licensing process and bring it in line with industry standards.
"With respect to this matter, we are confident that we have complied with New Zealand law in how we sell software to our customers," the company statement said.
"We are happy to sit down with the Commerce Commission to explain the changes to our new licensing program and show how the program is similar to those of our competitors in the industry over the last decade."
