Microsoft Sued for Banning Third-Party Xbox Memory Cards

Memory Cards Supplier Sues Microsoft

by Anton Shilov
11/24/2009 | 12:27 PM

Datel Design & Development, a well-known supplier of memory cards for Xbox 360 and other products, had filed an antitrust lawsuit in San Francisco federal court against Microsoft Corp. concerning Microsoft’s recent update of the Xbox 360 to render it incompatible with Datel Max memory cards.


The Max Memory card, in 2GB and 4GB sizes, was 100% compatible with the Microsoft Xbox 360 and was introduced in May, 2009. According to Datel, Max Memory has enjoyed enormous success and the company has sold over 50 thousand of devices. Max Memory has a suggested retail price of $39.99 for the 2GB, version, whereas, in contrast, Microsoft’s largest memory card is a 512MB card which was priced at $59.99 prior to the introduction of Max Memory and, in response to Max Memory, was reduced to $39.99.

“The Max Memory card plugs into the Xbox 360 and allows a user to store games, characters, and similar information. It permits a player to transport game information between Xbox systems. The Microsoft memory card does exactly the same thing – with the difference that it offers only one-quarter the memory while listing for the same retail price,” said Datel founder Mike Connors.

Datel claims that it recognizes Microsoft’s right to innovate. Nevertheless, Datel believes that the recent update which banned third-party memory devices from usage with Xbox 350 was a predatory conduct undertaken to deliberately harm competition with no benefit whatsoever to consumers.

“Antitrust law protects the right of consumers to choose. Just as a car manufacturer can’t require a buyer to purchase tires for the life of the car from the manufacturer, Microsoft cannot force consumers to buy accessories only from it. Free competition in the marketplace allows consumers the most choices at the best prices. Datel believes that its antitrust lawsuit will restore competition and permit consumers to enjoy the benefits of their Max Memory cards, as well as the many other innovative products Datel has in the pipeline,” a statement by Datel reads.

It is not a secret that video game console makers make money on accessories and video games, not on the console hardware itself. Therefore, it is hardly surprising that Microsoft has decided to earn additional profit on memory units, which are rather popular accessories among Xbox 360 Arcade console users since their devices do not have integrated hard drive. Nevertheless, Datel believes that Microsoft’s position is unclear.