Microsoft to cut prices in Taiwan settlement deal

Microsoft Corp. will lower prices for some of its software sold in Taiwan by more than 25 per cent as part of a settlement agreement reached with Taiwan’s Fair Trade Commission (FTC), the company said.

The agreement ends a nine-month-long investigation into the Redmond, Washington, software company’s business practices here.

In May 2002, the FTC began an investigation to determine whether Microsoft had abused its position as the dominant provider of PC operating software to inflate local prices for its products in violation of local fair trade laws. That investigation proved inconclusive after six months and, in October 2002, the FTC accepted a Microsoft proposal to negotiate a settlement

After months of back-and-forth negotiations, the two parties reached an agreement on Thursday.

As part of the deal with the FTC, Microsoft will cut the prices quoted to distributors for some of its software products by an average of 26.7 per cent, the company said.

The price of Windows XP Professional Edition will be cut by 23.7 per cent while the price of Office XP will be cut by up to 16.9 per cent, Microsoft said. The greatest cuts are reserved for Windows XP Professional Academic Edition (54.5 per cent), Office XP Academic Edition (50.1 per cent) and Word (42 per cent). The price cuts, for which specific dollar figures were not made available, will become effective on Mar.15.

Cutting prices on the academic versions of Windows XP will likely help cut down on software piracy at Taiwanese university campuses, said Sean Lee, director of sales and marketing at Linux developer eRexi Ltd. “This will let them (academic users) legalize most of their illegal copies.”

But the lower prices won’t have much of an impact on the growing adoption of Linux among some academic users. “There are very few users that are putting Linux on the client side,” Lee said, noting that Linux is primarily found on servers at local university campuses.

In addition to the price cuts offered as part of the settlement, Microsoft will also make available the components of its Office application as standalone applications, and share some of the source code for its Windows operating system with the Taiwanese government as part of the company’s Government Security Program (GSP), it said.

Russia and the U.K. are the only other countries that Microsoft has announced it will share its Windows source code with, said Pamela Chang, a Microsoft spokeswoman in Taiwan. Approximately 20 other countries have expressed an interest in the program, she said.