Class Action Lawsuit Accuses Microsoft Shopping of Stealing Affiliate Commissions

Boycat, Inc. has filed a class action lawsuit against Microsoft alleging that its Shopping extension included with the Microsoft Edge browser manipulates online traffic to steal commissions from online marketers.

• The lawsuit claims that the Microsoft Shopping browser extension is pre-installed on every Windows PC and is designed to divert commissions earned by online marketers to Microsoft.
• It seeks damages and a court order to stop Microsoft’s alleged practice of removing affiliate cookies and tracking tags, replacing them with its own cookies to claim credit for sales.
• The proposed class in the lawsuit includes all individuals in the United States who participated in an affiliate commission program with a U.S. e-commerce merchant and had commissions diverted to Microsoft as a result of the Microsoft Shopping browser extension.
• This case highlights the increasing concerns about the practices of large tech companies and their impact on smaller businesses and content creators.

How Affiliate Marketing Works

Affiliate marketing is a system where online marketers, including website operators, bloggers, YouTubers, and social media influencers, earn commissions by promoting products and services through unique affiliate links. When a consumer clicks on an affiliate link and makes a purchase, the online marketer receives a commission for driving the sale.

Microsoft Shopping displaces tracking tags that point to influencers as the source of the referral, substitutes Microsoft’s own tracking tags, and holds Microsoft out as the referrer of the specific products and/or services.

This system relies on tracking tags and cookies that identify the specific marketer who referred the customer. The “last-click attribution” model is typically used, meaning the last affiliate link clicked before purchase gets the credit.

Microsoft’s Alleged Scheme

According to the complaint, Microsoft Shopping disrupts this process by altering the tracking tags during checkout, replacing the marketer’s tags with Microsoft’s own. This allegedly happens even when the customer arrives at the online store via a unique affiliate link.

Microsoft programmed the Microsoft Shopping browser extension to systematically appropriate commissions that belong to influencers like Plaintiff and Class members,” the complaint states. “It does so by substituting its own affiliate marketing cookie in place of the online marketer’s affiliate marketing cookie, and this happens even though the customer used the online marketer’s specific affiliate web link to access the website on which they purchased the product or service.”

The lawsuit claims that Microsoft Shopping entices users to activate the extension by promising coupons, price comparisons, and cashback rewards. When users engage with these features, the extension allegedly removes the legitimate affiliate cookies and replaces them with Microsoft’s.

Plaintiff’s Claims

Plaintiff Boycat, Inc., an online content creator that earns commission payments from affiliate marketing links shared on its platform and social media channels, alleges that Microsoft’s actions have harmed them and other online marketers.

Boycat claims that Microsoft’s browser extension has diverted sales commissions it is rightfully entitled to as the generator of those referrals and sales.

The Microsoft Shopping browser extension is purposely designed to exploit the last-click attribution process, and it achieves this by producing pop-ups during the checkout process in order to simulate referral clicks.

In the past year, Boycat has received approximately $1,000 in commission payments from products purchased via its affiliate marketing links. However, they believe they would have earned more if not for Microsoft’s alleged scheme to divert affiliate marketing commissions through the Microsoft Shopping browser extension.    

The lawsuit accuses Microsoft of unjust enrichment, unfair competition, tortious interference with prospective economic advantage, and conversion.

Class Action Status and Proposed Class

The lawsuit seeks class action status to represent all individuals in the United States who participate in affiliate marketing programs and have had commissions diverted to Microsoft due to the Shopping browser extension.

If the lawsuit is successful, Microsoft could be liable for damages, including lost commissions and potential treble damages under consumer protection laws.

Big Tech Concerns

The Microsoft Shopping lawsuit underscores growing concerns about the practices of large tech companies and their potential negative impact on smaller businesses and content creators.

These concerns often revolve around allegations of anti-competitive behavior, misuse of data, and exploitation of market dominance by Big Tech. For example: 

• Amazon: Accused of using its dominant position in e-commerce to favor its own products and services over those of third-party sellers.
• Google: Faces allegations of manipulating search results to prioritize its own offerings and demote competitors, and recently lost an antitrust case over its search dominance.
• Apple: Criticized for its App Store policies, which some developers claim are designed to stifle competition and maintain Apple’s control over the app ecosystem.    
• Facebook/Meta: Repeatedly defended claims that it prioritizes profits over user privacy and fails to adequately address misinformation and harmful content on its platforms.    

Critics argue that these companies often leverage their dominant market positions to unfairly disadvantage smaller competitors and exploit users.

Milberg builds on these claims in its lawsuit by arguing that Microsoft’s actions with its Shopping browser extension unfairly harm competition by diverting commissions away from online marketers, giving Microsoft an unfair advantage in the affiliate marketing space and potentially discouraging online marketers from participating in affiliate programs, thus stifling competition in the market.

Milberg’s Anticompetition and Consumer Protection Practices

The plaintiff and class are represented by Milberg’s Gary M. Klinger and Alexandra M. Honeycutt.

Milberg attorneys have previously been named to the leadership team in a class action accusing Google of antitrust violations.

Another recent Milberg lawsuit claims that HP Inc. used software updates to block consumers from purchasing cheaper third-party replacement ink cartridges in its printers, creating a monopoly that allows it to charge exorbitant prices for aftermarket printer ink.

A national leader in consumer protection and anticompetition litigation, Milberg has successfully represented plaintiffs in class actions against some of the world’s largest and most well-funded corporations in sectors such as agriculture, healthcare, manufacturing, and technology.

Since 1965, Milberg has filed thousands of class action lawsuits, recovered billions of dollars for our clients, set groundbreaking legal precedents, and compelled corporate reforms through litigation.