Microsoft accused of extortion in new lawsuit

A Guatemala insurance firm, Seguros Universales SA, claims in a new lawsuit that Microsoft attempted to extort $70,000 from the firm as part of a raid of its offices in April 2012. Microsoft has already denied the claims.

The South Florida Business Journal reports that the lawsuit claims the raid occurred at the firm's Guatemala City location, with the assistance of armed local law enforcement officers. The lawsuit's statement added:

Microsoft then proceeded to extort Plaintiffs by demanding an on-the-spot agreement to pay $70,000 or Microsoft would remove all… servers containing ALL data and operational software.

Seguros Universales SA claims they already paid 98 percent of its required licensing fees to Microsoft. It added that the firm also had to pay $21,000 in taxes to the state government which it believes Microsoft should have handled.

Microsoft has denied the charges outlined in the lawsuit and added that "we look forward to addressing the claims." Guatemala does have a previous reputation of being a country with a rather high software piracy rate. The story said that as little as 20 percent of software in the country has been bought and used by businesses legally.

Source: South Florida Business Journal | Police image via Shutterstock

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23 Comments

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Agreeing to pay damages to an injured party to avoid prosecution isn't normally labeled extortion by lawyers.

More often, it is called business as normal. The thought that you could strong arm an office of lawyers is fairly laughable. The thought that they would portray events in favor of their point of view? Again, isn't that business as normal?

John Nemesh said,
I thought the lawsuit was going to be about Microsoft's extortion of Android manufacturers....cant wait for THAT extortion suit!

Easy fix, don't use stuff that belongs to another company. If it was really extortion, why hasn't anyone filed criminal charges yet? It *is* illegal.

It's funny when the Internet, the biggest cloud of skeptics ever assembled, rushes to believe any crazy story or rumor that depicts MS in a bad way.

Last time I checked and that was less than a minute ago. NO ONE has all the facts. So do we have a lot of arm chair lawyers in here?

You think MS would need to extort 70K on site? Really?

Some people make me want to laugh at their comments against MS. They are the same people who would only kick a person when their down instead of taking them down by a kick.

Usually demand letters are sent out numerous times to try and get a corporation to comply. Many many attempts will be made to assist them in getting right with their licensing. MS is not in the business of collecting 70K no matter what as the cost to coordinate this type of raid is more expensive than that. You don't get governmental action no matter how big you are just because you say so. You have to prove a major infraction for them to set this up. More than meets the news eyes folks.

mrmomoman said,
don't get governmental action no matter how big you are just because you say so. You have to prove a major infraction for them to set this up. More than meets the news eyes folks.

In a "perfect World" things would happen as you described buy in reality do not.......
Try a quick trip South right across the border..... A lot of fun but.... if you get in any trouble you need to "be smart", not play by the book.

I re-read the article: this caught my eye "Microsoft then proceeded to extort Plaintiffs by demanding an on-the-spot agreement to pay $70,000 or Microsoft would remove all… servers containing ALL data and operational software."

so.. simply steal all their hardware or hand over or agree to extort $70k? extortion.

chrisj1968 said,

so.. simply steal all their hardware or hand over or agree to extort $70k? extortion.

Sure, but did that really happen? You don't know that.

Microsoft has done this "extortion" since decades in several countries. However, it is a win-win situation because is way better for both part to regularize the situation of software than to resolve it in tribunals

However, sometimes it has backfired with false accusation.

SPEhosting said,
and that is why you go linux!

Yeah! Take on the task of writing your own documentation, providing your own support, and doing your own maintenance! That'll save money and boost morale!

ha its not as glum as that ... all my servers and some work stations are linux... cheap and easy... if i need to create documentation for anything its something that Microsoft would not have been able to provide any way (a specialist, area or non-OS related)

SPEhosting said,
ha its not as glum as that ... all my servers and some work stations are linux... cheap and easy... if i need to create documentation for anything its something that Microsoft would not have been able to provide any way (a specialist, area or non-OS related)

It depends on the application and the size/type of company you're deploying for. Commercial tools are usually much better at supporting an upgrade path between versions, while open source services require much more skill and involvement, and introduce more risk.

Open source tools often let an administrator build his own versions of add-ons that commercial tools might offer commercially. However, those commercial add-ons are more likely to be documented, while a home-grown solution introduces documentation as a task.

If the admin is away and the tool goes down, a commercial tool will have numbers to call. An open source tool will not, and god forbid you've customized it.

I 100% see your side of this and where you are coming from but there are so much more (in my personal opinion ) benefits to a linux to a windows when viewing commercially most of what you described as a down side I view as an up but no i do agree with your points...

I agree with them. They obviously shouldn't have been using pirated software which is stupid but if they were it should have been handled by the criminal justice system, not by trying to extort payments, a corporate entity shouldn't be threatening to take away equipment that doesn't belong to them.

I have a feeling that it may end up as a court stalemate but it's time we stopped pretending corporations have the right to play God.

Yeah! **** corporations! Why should we pay them for their products? They have enough money already!
/s
There is WAY more to this story than what is being reported. $70k is nothing to MS.

So they're saying Guatemalan law enforcement raided their offices at Microsoft's request and allowed Microsoft to extort them because they were found to have been illegally using Microsoft's software. Sounds like a stretch but anything is possible.

local MS offices or not, the trail then leads to the overall MS corporation in redmond. kind of akin to "keeping your kids in check." This doesn't bode well for MS if this is founded to be true

don't know enough to form a solid opinion, other than if the firm was ripping off software they had it coming but if what they say is true and they had been meeting MS's demands (bar the remaining 2% licenses) then it seems heavy handed. Of course there is no background info so who knows.