[Linux-aus] [Fwd: [SLUG] Re: returning windows software]

[Del]

Hi,

This issue of returning windows software provided with a name brand
laptop has come up again on the SLUG list.  I have suggested that someone
possibly from LA needs to take this up with the ACCC.  I know that OSIA
have discussed the issue and there have been pros and cons put forwards
on either side.  A few OSIA members have taken some complaints to the
ACCC, but nothing concrete has come out of the organisation so far.

So I will raise this one with LA and OSIA again.  Because it's an issue
that affects Linux users rather than Linux companies, perhaps it's best
brought to bear by LA.

This is probably the most relevant of the emails, containing most of
the background information required.

I note the comment below that ACCC hasn't received any number of complaints
about the issue -- perhaps it's time to start making some.


-------- Original Message --------
Subject: [SLUG] Re: returning windows software
Date: Thu, 20 Oct 2005 20:57:40 +1000
From: Nicholas Jefferson <xanthophile at gmail.com>
Reply-To: <slug at slug.org.au>
To: Russell Davie <rjrd at exemail.com.au>
CC: slug at slug.org.au
References: <20051020131225.6d85f6a1 at localhost.localdomain>	<435710CF.80404 at i8it.net>	<20051020135045.1c066c88 at localhost.localdomain>	<9c2cca270510192053y16e43f7cq7c80c1b80eb17887 at mail.gmail.com>	<20051020141829.66664bb1 at localhost.localdomain>	<20051020142548.609d66a8.erikd at mega-nerd.com>	<20051020143526.65f8725c at localhost.localdomain>

Hi Russell,

I have not received a refund yet... but let me tell you the story so far:

A long time ago in a galaxy far far away...

Oh, sorry - wrong story! A long time ago I bought a laptop from
Twinhead Corporation [1] via a retailer in Sydney. I told the retailer
that I did not want the preloaded software. The retailer said I should
contact the manufacturer for a refund. So I did. The manufacturer
refused to give me a refund for the software because of a contract
they had with *ahem* the world's greatest software company that all of
the manufacturer's "Efio" branded machines must be preloaded with the
software in question. Since *all* of the manufacturer's machines were
"Efio" branded this qualification is a distinction without a
difference.

[1] http://www.twinhead.com.au/

So I contacted the ACCC [2]. Y'see, I like a free market. I like it
when manufacturers can choose what to sell and consumers can choose
what to buy. But coercive contracts do not respect this freedom. The
manufacturers have little choice but to accept these contracts when
ninety-something percent of the consumers want software preloaded. The
consumers have no choice when the manufacturers accept these
contracts.

[2] http://www.accc.gov.au/

The end result is that *all* consumers lose because without
competition in this market the consumers will never see the better
products at lower prices that might have been. Most consumers will
never appreciate this loss. After all, how can one quantify the loss
of a hypothetical choice? I answer that the market price for an
operating system in a free market may be estimated by considering the
profit margin that *ahem* the world's greatest software company
derives from its products. I have read that this profit margin is in
the order of 90% and so the market price for an operating system would
be about $A30 in the absence of coercive contracts. Thus the current
situation constitutes a theft of hundreds of dollars from *every*
consumer.

So coercive contracts are unjust. As it happens, coercive contracts
are also unlawful. The Trade Practices Act 1974 [3] is the relevant
legislation.

[3] http://www.austlii.edu.au/au/legis/cth/consol_act/tpa1974149/

Section 45 prohibits contracts, arrangements or understandings which
contain "exclusionary provisions" - an agreement between persons "any
two or more of whom are competitive with each other" where "the
provision has the purpose of preventing, restricting or limiting: (i)
the supply of goods or services to, or the acquisition of goods or
services from, particular persons or classes of persons; or (ii) the
supply of goods or services to, or the acquisition of goods or
services from, particular persons or classes of persons in particular
circumstances or on particular conditions; by all or any of the
parties to the contract, arrangement or understanding". Section 45
also prohibits contracts, arrangements or understandings which contain
any provision that "has the purpose, or would have or be likely to
have the effect, of substantially lessening competition".

Section 46 prohibits a corporation "that has a substantial degree of
power in a market" from taking advantage of that power for the purpose
of: "(a) eliminating or substantially damaging a competitor of the
corporation [...] in that or any other market; (b) preventing the
entry of a person into that or any other market; or (c) deterring or
preventing a person from engaging in competitive conduct in that or
any other market." Section 46 also sets the standard of evidence
required for that section: "Without in any way limiting the manner in
which the purpose of a person may be established for the purposes of
any other provision of this Act, a corporation may be taken to have
taken advantage of its power for a purpose referred to in subsection
(1) notwithstanding that, after all the evidence has been considered,
the existence of that purpose is ascertainable only by inference from
the conduct of the corporation or of any other person or from other
relevant circumstances."

The ACCC sent me a response that was nine-tenths bullshit. I wrote
back in contradiction - very politely! - with equations and diagrams
that the behaviour of the manufacturers cannot be explained by volume
licensing, that *all* Twinhead machines were "Efio" branded, and that
Twinhead had *admitted* to having a contract limiting the supply of
goods. Time passed. Several weeks ago I telephoned the ACCC and spoke
with the contact officer for the case. She had since moved to another
section and she said she would have the director call me. The
director, Michael Kiley, has not yet contacted me.

While writing this email I checked Twinhead's website. They now offer
laptops with Linux preloaded, including "Efio" branded laptops. This
is good news and bad news...

The bad news first: compare the two most similar laptops on offer -
the efio 12KTL [4] and the efio 12KT [5]. I have summarized below the
differences between these systems. Could someone please estimate the
market price difference in the *hardware* components of these systems?
It seems that people buying the efio 12KTL may still be paying the
tithe to *ahem* the world's greatest software company while being led
to believe that they are not. However, it is possible that preloaded
trialware may cover at least part of the cost of the operating system
in the efio 12KT. I estimate that several dozen trailware packages
would be needed to cover the cost entirely. Could someone please
verify whether or not manufacturers typically preload this much
trialware on laptops?

[4] http://www.twinhead.com.au/product_detail.asp?productid=153
[5] http://www.twinhead.com.au/product_detail.asp?productid=154

efio 12KTL - $A1299
256MB DDR RAM, 40GB HDD
Internal DVD+CDRW Combo Drive
Abec LINUX Suite inclusive of Open Office Suite:
Spreadsheet, Word Processor, Presentation Programme

efio 12KT - $A1599
512MB DDR RAM, 60GB HDD
Internal DVDRW Dual Drive
Microsoft(r) Windows(r) XP Home Edition

The good news: this offer shows that Twinhead is capable of producing
systems with free software. This was never in doubt by any person with
greater intelligence than a retarded chimpanzee, but Twinhead has now
lost any hope of denying this.

Russell, could you please ask the manufacturer of your laptop for a
refund of the software? You may need to ask several times before they
will admit to having a contract limiting the supply of goods. When
they do, please forward their admission and all relevant details to
the ACCC and cc me: xanthophile (at) gmail (dot) com. The contact
officer at the ACCC told me that nobody complains about this. If you
cc me (so the ACCC knows it, i.e. not bcc) then hopefully they won't
speak horseshit next time.

If you know anyone else who has bought a laptop recently, could you
please forward this email to them?

Thank you,

Nicholas
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-- 
Del