In the summer of 2015, Microsoft released their Windows 10 operating system to much fanfare. It came with a new wrinkle: it was free…in a manner of speaking. Right now, Windows 7 and 8 users have to pay to upgrade, but for an entire year, for several hundred million Windows 7 and 8 users, switching to Windows 10 cost nothing.
Free software is nothing new. Operating system upgrades for Mac computers, for example, are often free. So Microsoft was just jumping on board with Apple, right?
Wrong. Apple makes their money from hardware. Mac OS upgrades are free if you’ve already plunked down huge sums for a Mac. But for decades, Microsoft has been a software company. While they are now getting into the hardware business with items like the Surface Pro tablet, charging for software has always been Microsoft’s bread-and-butter. If they start giving away what they used to charge for, where is the profit going to come from? How, exactly, is Microsoft making money on Windows 10?
When asked, Microsoft responded with the kind of language beloved of PR departments, including one part that actually referred to Windows 10 as an “ecosystem to be enhanced,” but the main bits read, “There are many customers operating Windows 7 and Windows 8.1 that are excited about Windows 10, and as we expose more consumers to our new features, we know they’ll see updating is a given. Typically, PC owners upgrade their PC because of new hardware improvements, not software, so we expect Windows 10 will spur a significant wave of new PC purchases for devices that take advantage of lots of the new features that are in Windows 10…. We think about the monetization of our products throughout their life-cycles, augmenting licensing revenue by driving distribution and engagement for Microsoft services.”
As far as that was semantically decipherable, a translation into coherence might read, “Windows 10 is wonderful and we’re giving away hundreds of millions of copies, even though this means potentially forgoing many billions of dollars of revenue. Consumers will hear it is great and run out and buy a new laptop, desktop, or phone with Windows 10 on it, and we do charge for the copies of Windows 10 on new hardware. So this give-away is a multi-billion dollar ad for consumers to go buy a new piece of hardware so we can charge for that copy of Windows 10.”
As for how “enhancing the health of the ecosystem” and “thinking about monetization and augmenting revenue by driving distribution,” explains how giving something away translates into income, one must occasionally admit defeat before such masterly obfuscation. Did I ask a question? Was it answered? What’s my name? What day is this? Officer, help, I think I’ve been Microsofted!
If Microsoft believes “free” Windows 10 is so great that it will be an advertisement for hardware with Windows 10 on it, Windows 7 and 8 users must have beaten down Microsoft’s door to get that excellent free Windows 10 OS, yes?
No. Or at least, not if one goes by the absolute tsunami of complaints about the tactics Microsoft has used to trick 7 and 8 users into switching to Windows 10. One such tactic was screwing with the pop-up box Windows 7 and 8 users see prompting them to download Windows 10. Clicking on the red X in the upper right hand corner, which for decades has meant “no” or “close,” morphed into, “You bet I want Windows 10!”
Not only is giving the red X any functionality other than closing a box sneaky and deceptive, it is an express violation of Microsoft’s own development guidelines.
By now, Microsoft’s sleazy tactics to force Windows 10 down the throats of 7 and 8 users are so extensively documented, one only has to search on “Windows 10” and “nagwear” or “malware” to find hundreds of articles. Nor is it hard to find news of the lawsuits Microsoft is being slapped with for damages incurred by involuntary switches to Windows 10.
Possibly the most diverting group of complaints can be found in the comments section of Change.org petition, “Have the Electronic Frontier Foundation [EFF] Investigate Microsoft for Malicious Practices Regarding Windows 10.” Our favorite comment on the forced switch to Windows 10 came from Brian Tatman of Hot Springs, Arkansas: “It’s like someone changing your underwear while you sleep!”
The petition currently has over six thousand signatures. While the EFF has not yet launched any legal actions, it did release a report on August 17th written by Amul Kalia damning Microsoft’s practices in no uncertain terms. “Microsoft should come clean with its user community,” wrote Kalia, “Otherwise it will face backlash in the form of individual lawsuits, state attorney general investigations, and government investigations.”
Who Or What Is Being Sold
Microsoft has been rather coy about whether, like Google, Facebook, and LinkedIn (which Microsoft just bought), they are jumping into the business of data mining. Those other services have always been “free” to users, at the cost of divulging huge volumes of personal information about both online and offline activities. Users of such services are monetized and sold to advertisers to an extent that most Americans still don’t really grasp.
Microsoft has promised, scout’s honor, that it is not copying your documents, reading your emails, or the like. However, they also say, “When you interact with your Windows device by speaking, writing, or typing, Microsoft collects speech, inking, and typing information—including information about your Calendar and People.”
This is what Microsoft calls “getting to know you.”
Perhaps for Microsoft, saying Windows 10 is not going to read your email or documents, but it is going to keep a record of everything you say or type, what’s on your calendar, and the identity of all your contacts does not trigger crazy cognitive dissonance.
Florida attorney Bob Tankel of the Tankel Law Group, for one, was not sanguine about that unregulated data-sucking. He told The Technoskeptic, “From everything I can tell, this is poorly reviewed on privacy concerns, especially where the attorney-client privilege is concerned.”
The good news is Windows 10 does allow users to considerably curtail the amount of data Microsoft collects on them, but only if they customize installation. If users choose “Express Install,” that option is lost; the default install setting is that Microsoft records everything you type and say. For those users both concerned about privacy and willing to make the time investment to navigate the long “non-express” setup process, users only have to locate the privacy-related options scattered on 12 separate installation screens.
Unless, that is, Microsoft changes those settings back to the default, which they did with the first major update in fall of 2015. When users noticed the update caused the privacy options to revert to the info-sucking defaults, Microsoft promised that was simply a mistake and promised to fix it.
Who’s Keeping an Eye on Microsoft?
In researching this story, one noteworthy data point was finding how difficult it was to get tech and privacy experts to respond. The ACLU, for example, declined repeated requests for comment. I was directed by a chief technologist for a consumer protection group to reach out to two academics, one at Berkeley, another at the University of Washington, who had recently written a major paper on the real cost of “free” software. Both ignored repeated contact attempts, and when I mentioned this to the person who originally directed me their way, he replied, “Oh…yeah. I think one of them works for Microsoft now.”
Of the two tech gurus who would respond on record, both took it as a given that Windows 10 is free so it can suck up your personal data.
If you’ve ever picked up a “Dummies guide to X Microsoft product,” Woody Leonhard almost certainly wrote it. Despite earning a significant chunk of his daily bread explaining Microsoft’s products, he’s never been shy about taking Microsoft to task in his role as senior editor for InfoWorld.
According to Woody, “At this point, Windows 10 is a free upgrade because Microsoft’s hoping to make more money from mining information and advertising in the future than they historically have with charging for upgrades.” He’s also fine with that being the case, as long as Microsoft is transparent about what it is doing. Which, as he has noted more than once in print, it definitely isn’t.
Cryptographer and privacy expert Bruce Schneier concurred with Woody Leonhard’s take, saying “…I’m sure they’re looking at Google and Facebook and ways to monetize their information streams.”
So tech insiders assume that Microsoft’s data-mining goes without saying. But if nobody else is really talking about it, how would Windows 10 users that aren’t tech-geeks know it?
Gimme That Google Money
When I first started researching this article six months ago, an unanswered question was whether Windows 10 was free as part of a strategy to pry users away from Google and those sweet, sweet search revenues. A quick re-reading of the statement from Microsoft’s spokesman will not find any mention of search.
Thanks to Woody’s reporting for InfoWorld, we’ve since learned that Microsoft is indeed trying to use Windows 10 to force users away from Google towards Microsoft’s Bing. Here is how they do it. Cortana is the personal digital assistant built into Windows 10, analogous to Amazon’s Echo or Apple’s Siri. It has garnered considerable praise for its functionality; many Windows 10 users regard Cortana as the best part of the OS. When Windows 10 was released, Cortana could be configured to use other major search engines, including Firefox and Google, to answer search requests.
Now it can’t.
Users can still use other engines to search, but if they shout from across the room, “Hey Cortana, where is the nearest ice cream shop?” Cortana will use Bing to give the answer. If a user wants to know what Google thinks the best shop is, the user has to sit down at the keyboard, go to Google and type in the question. This deliberately flawed functionality harks back to tactics that got Microsoft sued by the federal government in 1998 for anti-trust violations, when it bundled the Internet Explorer browser with Windows, while competing browsers became harder to use and install on a Windows machine. (Historical note: At the trial, Microsoft repeatedly provided false evidence and testimony.)
Microsoft can hardly be faulted for wanting to grab a chunk of Google’s billions; that’s what economic competition is all about. And Microsoft’s plan is working. According to Leonhard, Bing search revenue grew 25% during the fourth quarter of 2015. In the first quarter of 2016, it’s up another 18%.
What Microsoft can be blamed for is hiding what they’re up to. It’s disingenuous to claim that making Cortana unable to work with other search engines was done for the benefit of their customers, rather than to undermine Google and grab a chunk of their revenue. But even if new Windows 10 users complain that Cortana can’t “Google” something, Microsoft has a great response: “Hey, what did you expect? It was free!”
When “Free” Means a Paid Subscription
When explaining how Windows 10 can be free, we have to ask what is Microsoft’s long term plan is for Windows 10 users.
Microsoft claims that the new OS is free so it can be an advertisement for new hardware running Windows 10. This strategy seems questionable in light of the huge amount of ill will Microsoft’s dictatorial tactics have generated.
However, there is one economic case in which Microsoft’s eagerness to get users to upgrade makes perfect sense no matter how many users they alienate in the process. That is if Microsoft’s ultimate plan is to force users to start paying for it on a regular basis. Microsoft has already switched to a subscription model for Office, now called called Office 365. The most basic package starts at $6.99 a month or $69.99 a year.
Indeed, Forbes contributor Gordon Kelly has made a compelling case in various articles that Microsoft’s long term goal is almost certainly a transition to “software as a service,” which is the industry term for a paid subscription. What is not clear is how soon Microsoft might make the “We said it’s free…and now were saying it isn’t” transition.
Kelly reported another tactic to force transition to Windows 10, one which has flown under the radar so far: Microsoft has moved up the dates when it will stop supporting Windows 7 and 8. As of mid 2017, if hardware manufacturers want to use the latest chipsets, they will no longer be able to use Windows 7.
What Have We Learned?
At the end of the day, making Windows 10 free doesn’t make a whole lot of sense, unless Microsoft makes as much or more money as when you pay for it. Between monetizing user info for advertising, boosting search revenue at the cost of flexibility and choice, and forcing users to buy a Windows 10 subscription down the road, Microsoft stands to get paid not once, but three times.
Hey! Perhaps now I do understand what Microsoft means by “monetization of our products throughout their life-cycles.” Instead of telling consumers, “This is our product, and here is what it will cost you,” Microsoft has decided that quietly dipping into users’ pockets multiple times will turn “free” into a very profitable word.