A British software reseller called ValueLicensing has reportedly sued Microsoft in the High Court in London for an eye watering £270 million.

Derby-based ValueLicensing specialises in the resale of second-hand (pre-owned) Microsoft software licenses and is said to be a Microsoft partner.

But the Financial Times quoted it as alleging that Microsoft is abusing its power in the software market.

Unhappy partner

It alleged that Microsoft has “stifled the supply of preowned licences” through clauses in customer contacts since “at least 2016”.

Microsoft revamped its enterprise software licensing terms in 2016, saying that the new model was a “better” way to buy bulk enterprise wide software licences.

ValueLicensing argues that the 2016 clauses gives customers a discount on other Microsoft products and services, in exchange for them not selling on their redundant licences.

This of course is a real issue for ValueLicensing, as its business model relies on it being able to buy these licences in order to sell on.

The reseller also alleges that non-disclosure agreements (NDAs) 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,” Jonathan Horley, MD at ValueLicensing is reported as saying.

“ValueLicensing is not the only victim,” said Horley. “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,” Horley added. “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.”

Court action

The British reseller claims it has lost an estimated £270m in gross profit since 2016 because of Microsoft’s conduct, related specifically to sales of desktop products.

ValueLicensing in its High Court lawsuit is demanding that Microsoft’s clauses are ruled “illegal and enforceable”.

It also wants the NDAs removed from contracts; and, ultimately, Microsoft ends its “illegal conduct”.

Microsoft told the Financial Times it cannot comment on ongoing legal cases.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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