Memory card company Datel filed an antitrust case in a California district court that alleges Microsoft was restricting consumer choice by disabling 2GB memory cards it makes for the Xbox 360.
The filing alleges that the largest memory card Microsoft approves for use with the Xbox 360 is a 512MB card, which costs $39.99 - the same price as the card Datel supplies.
Datel said: "In October 2009, Microsoft deployed a software update to the Xbox 360 known as a dashboard update." Users must download the update to access online gaming - and it's alleged the update disables Datel's memory.
"There is no benefit to consumers from Microsoft's decision to target and disable Datel's memory cards. To the contrary, Microsoft's actions will leave approximately 50,000 consumers with useless memory card...and deprive future consumers of the benefits of competition."
It also alleges Microsoft's dashboard upgrade forecloses competition from Datel in the sale of other Xbox accessories. These are "arbitrary contrivances intended to perpetuate Microsoft's market power."
The case was filed six days before Thanksgiving Day.