A divided Iowa Supreme Court last week reinstated a class action lawsuit against Microsoft brought by Joe Comes on behalf of himself and his fellow Iowans who purchased computers that came pre-installed with Windows 98. As end-user licensees of the operating system, Comes charged that he was forced to pay “a monopoly price” for the privilege of using Windows, thus he should be justly compensated for this crime against humanity.
Under federal antitrust law, Comes has no case, since the U.S. Supreme Court has held that secondary–or “indirect”–consumers may not assert standing in antitrust cases, since such consumers do not suffer a legal “injury” as the result of companies running amok and subverting competition. Iowa’s own “Competition Law” says that the state will follow the federal interpretation in state antitrust cases, so that the enforcement of said laws are at least consistent.
The Iowa Supreme Court’s decision changes all that.
Now, in the state of Iowa at least, anybody who has ever bought or used Windows can essentially join a class action against the company for antitrust violations.
The court majority ignored the law and decided to impose their own view of what antitrust law should be–making companies pay for daring to produce and compete–and in doing so introduced further chaos into the already “Wild West” world of antitrust litigation. Now interest groups that have an ax to grind with a company can go forum shopping for states that allow secondary consumers to sue under local antitrust laws. This means that any company which sells products via retail will be potentially liable for charging prices that a judge or jury deem “too high”, “unfair” or “anticompetitive”.
Lost in all this is any sense that the consumers are voluntarily purchasing these products in the first instance. Joe Comes didn’t have to buy a computer with Windows pre-installed. He could’ve bought a Mac or installed Linux on the Intel machine he did buy. Instead he’s using the courts like it’s a giant rebate center.
He’s asking us to morally condemn Microsoft for having the audacity to actually take his money when he willingly offered it to them. And the Iowa Supreme Court sees nothing wrong with this–after all, if Microsoft was willing to allow Joe Comes to buy their “monopoly priced” software, who knows what the company will do tomorrow, they could be selling you software that you might want. And then the vicious cycle of supply-and-demand will spin completely out of control.