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California sues Microsoft for antitrust--again

Five California counties and two cities sue the software giant under state antitrust laws, for taking advantage of government buyers.

California is trying to make Microsoft pay--again.

Five state counties and two cities have filed a class-action lawsuit against the software giant for using its monopoly power to deny government agencies free choice in software products and charge high prices. The legal action, filed by the city and county of San Francisco, said that Microsoft's tactics caused harm to government users of its Windows operating system and Word and Excel software.

"It's anticompetitive, it's predatory, and it denies consumers, and in this case taxpayers, the benefits of innovation that a free marketplace should provide," Dennis Herrera, attorney for the city of San Francisco, said in a statement.

The lawsuit follows successful class actions against Microsoft in several states, including a $1.1 billion award to California consumers. The same law firm that argued that civil action is representing California counties and cities in the latest legal maneuver. The lawsuit, which could recoup millions of dollars for the California government, also comes as the state took out loans to compensate for a $15 billion budget shortfall.

Microsoft had not seen the complaint against the company, but a representative said Microsoft's policies have been fair.

"We value our relationship with these cities and are grateful for the opportunity to provide them with software at very reasonable prices," said Stacy Drake, a spokeswoman for the Redmond, Wash., company.

The city and county of Los Angeles, Santa Clara County, San Mateo County and Contra Costa County are all taking part in the class action.

"When the (previous California) settlement was announced, we had governmental agencies asking for their part of the recovery," said Daniel Furniss, litigation partner for Townsend, Townsend & Crew, the law firm that represented California consumers in the previous case and that filed the current class action on the part of the government agencies. "Having seen what has happened nationwide, they have a feeling that money is owed."

While the previous case has taken more than five years to wend its way through the courts, Furniss said the time does not make much difference to the legal standing of the complaint.

The lawsuit also comes as Microsoft is facing increased competition by open-source groups and their community-developed software, such as Linux.

A body of independent auditors and experts recommended this month that California consider open-source software and voice over Internet Protocol telephony as two measures to cut costs. The suggested measures are a small part of the voluminous California Performance Review, released Aug. 2.

Open-source software and the Linux operating system are widely considered the most serious competitors to Microsoft in the operating system and enterprise software market.