Five state counties and two cities have filed a class-action lawsuit against the software giant for using its monopoly power to deny government agencies free choice in software products and charge high prices. The legal action, filed by the city and county of San Francisco, said that Microsoft's tactics caused harm to government users of its Windows operating system and Word and Excel software.

"It's anticompetitive, it's predatory, and it denies consumers, and in this case taxpayers, the benefits of innovation that a free marketplace should provide," Dennis Herrera, attorney for the city of San Francisco, said in a statement.

The lawsuit follows successful class actions against Microsoft in several states, including a $1.1 billion award to California consumers. The same law firm that argued that civil action is representing California counties and cities in the latest legal maneuver. The lawsuit, which could recoup millions of dollars for the California government, also comes as the state took out loans to compensate for a $15 billion budget shortfall.

Microsoft had not seen the complaint against the company, but a representative said Microsoft's policies have been fair.