Microsoft historically engaged in licensing practices that discouraged the installation of non-Microsoft operating systems. Microsoft once assessed license fees based on the number of computers an OEM sold, regardless of whether a Windows license was included. Beginning in 1983, Microsoft sold MS-DOS licenses to OEMs on an individually negotiated basis. The contracts required OEMs to purchase a number of MS-DOS licenses equal to or greater than the number of computers sold, with the result of zero marginal cost for OEMs to include MS-DOS. Installing an operating system other than MS-DOS would effectively require double payment of operating system royalties. Also, Microsoft penalized OEMs that installed alternative operating systems by making their license terms less favorable.: 165–66 Microsoft entered into a consent decree in 1994 that barred them from conditioning the availability of Windows licenses or varying their prices based on whether OEMs distributed other operating systems. Microsoft General Counsel Brad Smith said that the decree was effective in allowing Dell and HP to offer Linux computers, and Jeremy Reimer of Ars Technica stated that the decree made it "fiscally realistic to sell computers with alternative operating systems". In 1999, a Microsoft representative stated that their contracts with OEMs did not "stop[] any OEM from shipping any operating system on their PCs". In 2010, Microsoft stated that its agreements with OEMs to distribute Windows are nonexclusive, and OEMs are free to distribute computers with a different operating system or without any operating system. In a 2001 article in Byte, it was reported that license agreements between OEMs and Microsoft forbade OEMs from including Windows alongside another operating system on the same computer. According to a 1999 New York Times article, "critics assert that the company continues to use its market clout to ensure that nearly all new personal computers come with Windows pre-installed."
In 2009, Microsoft stated that it has always charged OEMs about $50 for a Windows license on a $1,000 computer. In 2007, Dell stated that its computers with Ubuntu installed would be priced about $50 lower than comparable systems with Windows installed. In a 2010 ZDNet article, Chris Clay wrote that Dell computers with Ubuntu preinstalled were priced higher than identical systems with Windows preinstalled, even though Ubuntu is distributed gratis. The claimed increase in the price of a computer resulting from the inclusion of a Windows license has been called the "Windows tax" or "Microsoft tax" by opposing computer users.
Some computer purchasers request refunds for Windows licenses included with their purchased computers because they do not want to use Windows, preferring an operating system such as Linux instead. Jeff Walsh of InfoWorld said that businesses with site licenses can save money by requesting refunds of Windows licenses included with purchased computers.
Users can avoid the "Windows tax" altogether by assembling a computer from individually purchased parts or purchasing a computer from an OEM that does not bundle Windows. Some smaller OEMs and larger retail chains such as System76 have taken to specializing in Linux-based systems to their advantage from major suppliers' paucity of non-Windows offerings. Beginning in 2007, Dell offered computers with Ubuntu pre-installed. In 2014, Hewlett-Packard stated that it sells "units bundled with a built-in OS and those without". Some Linux distributors also run 'partnership' programs to endorse suppliers of machines with their system pre-installed. Some vendors purchase computers from major OEMs, install Linux on them and resell them. Chris Clay of ZDNet wrote that employee discount programs create a financial incentive to purchase computers from a large manufacturer, even if the manufacturer does not offer computers without Windows.
Microsoft does not provide refunds for Windows licenses sold through an OEM, including licenses that come with the purchase of a computer or are pre-installed on a computer. A Microsoft Denmark representative stated that Microsoft's Windows license terms allow OEMs to offer a refund for just the Windows license. Microsoft's End User License Agreement for Windows 11 states that:
OEM policies for refunding unused Windows licenses vary. Some OEMs have programs that specifically allow a user to receive a refund for an unused Windows license. Acer US has a Windows refund program where a user can ship a computer with an unused copy of Windows to the Acer service center and have the computer returned without Windows for a refund. Acer's policy requires the customer to return items at their own expense, and the balance received by the customer can be as low as €30. The same applies for EU, the reported refund as of 2014 is €40 for Windows 8. Other vendors, like Dell, have ad hoc procedures for users to request a refund of a Windows license; one user who received a £55.23 refund from Dell said of the process, "I was pretty gob-smacked that it was so easy". In some cases, vendors have asked that customers requesting refunds sign non-disclosure agreements. In 1999, a Toshiba representative stated that a case where a user obtained a $110 refund was "not the typical policy and not what other people will run into if they try it". Other vendors do not issue refunds for Windows licenses. In February 1999 InfoWorld reported that "No PC manufacturers are currently offering refunds for users who do not use Windows". According to a 1999 Maximum PC article, Dell did not provide refunds for Windows licenses, interpreting the license agreement to "treat the hardware and software as a single package that must be returned". In 2009, Sony refused to offer a partial refund for a customer who declined the Windows Vista EULA, instead offering a refund for the entire computer, which the customer declined.: ¶20–21
Litigation by users denied a partial refund for an unused Windows license has resulted in rulings in France and Italy that bundling Microsoft Windows and then refusing to offer partial refunds for just the Windows license violates applicable law. In September 2014, the Supreme Court of Italy in ruling 19161/2014 decided that a laptop buyer was entitled to receive a refund of €140 for the price of a Microsoft Windows license and a Microsoft Works license on a computer, saying that bundling was "a commercial policy of forced distribution" and called this practice "monopolistic in tendency", confirmed later with ruling 4390/2016. In December 2020, the Court of Monza (Italy) in ruling 1734/2020 imposed upon the manufacturer punitive damages amounting to €20,000 for abuse of the appeal procedures. In India, bundling is challenged by users as a violation of Competition Act 2002; one Indian citizen has sent a legal notice to HP. However, in another license refund case, a French appellate court ruled in favor of the OEM, "holding that the sale at issue did not constitute the unfair commercial practice of coercive selling, which is not permitted under any circumstances, an unfair commercial tying practice, or a misleading or aggressive commercial practice.": ¶24 The case is pending before the Court of Cassation.: ¶26
Websites have been created for the specific purpose of spreading information about the issue and educating others on their options for getting a refund. A 1999 rally opposing the bundling of Windows attracted about 100 protesters and gained media attention worldwide. The overall goal of such events has been to get OEMs to expand their selection of computers without a copy of Windows pre-installed, with the additional goal of getting them to revise and improve their refund policies while the first goal has not been met. An analyst stated that refund actions by individual users were "a publicity stunt [that] has no impact".
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