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Microsoft Scores Another Major Settlement In Its Favor, & One That Might Hurt Apple's Education

Microsoft Scores Another Major Settlement In Its Favor, & One That Might Hurt Apple's Education Sales

by , 12:15 PM EST, November 21st, 2001

Microsoft has reached another landmark settlement in the various antitrust litigation against the company. The company has reached a settlement with the attorneys for several class action lawsuits that had been launched, accusing the company of overcharging them based on the findings that the company had abused its monopoly power. This not the same case as the main antitrust trial that the company has also negotiated a sweetheart deal, but a class action case being sought by millions of Wintel lemmings around the country.

Under the terms of the settlement, Microsoft would pay not the plaintiffs, but would instead pay somewhere between US$550 million and US$1 billion to low income school districts. Better yet, as far as Microsoft is concerned, that payoff would largely be in the form of its own software. That's right, the company would be punished for being a monopolist by being allowed to make further inroads into the education market, and thus extending its monopoly. From a Forbes.com report:

The proposed settlement will pay for teacher training, technical support, refurbished computers and copies of Microsoft's most popular software, such as Windows and Office, at more than 12,500 schools, Microsoft said. Microsoft admits no wrongdoing in the settlement, as is standard in agreements of this kind.

The company said it will take a pretax charge of about $550 million in the current quarter ending Dec. 31 to cover the proposed settlement. After taxes, the company expects to incur a charge of about $375 million, or between 6 cents and 7 cents per share.

"We are pleased to reach a solution that will benefit millions of America's most economically disadvantaged children and thousands of public schools with the greatest needs, and also will enable everyone to move beyond costly and unnecessary litigation," said Microsoft Chief Executive Steve Ballmer.

We bet you are pleased, Mr. Ballmer. Fortunately, not everyone participating in the class action suit is quite as pleased with this farce of a settlement. From a TheStreet.com report:

"Under this settlement, they're giving away their software, which has zero marginal cost for them, and putting it in poor schools that never would have bought it anyway," says Ed Black, head of the Computer & Communications Industry Association, an anti-Microsoft trade group. "They're like the guy on the street that's got people watching the pea in the pod: Microsoft's got everyone watching, but they just put the pea in their pocket and walked to the bank."

"It's not a punishment, it's a reward," says Eugene Crew, an antitrust attorney at Townsend & Townsend & Crew in San Francisco who has been working on the California portion of suits. He says that his firm was taken aback by the proposed settlement, which it first read about in media reports Tuesday morning. He says he'll ask U.S. District Court Judge J. Frederick Motz not to accept the proposed settlement during a hearing set for next Tuesday, or at least release his clients from being covered by it.

This same report quotes a Microsoft spokesperson in a way that suggests that Microsoft might be including Macs or Mac software to schools that so choose:

For its part, Microsoft says it's pleased to have the opportunity to settle the suits in such a unique and beneficial way. And it also says it's not making a grab for Apple's school market, because schools will be allowed to choose what kind of computers and software they want to buy and learn on.

"If you choose to interpret it that way, that's your decision," says Matt Pilla, a Microsoft spokesman. "But no matter how you slice it, it's a good thing for kids and its platform-agnostic. If a school needs to have a specific technology, whether it's Mac or PC, that's their choice."

We don't have clarification of exactly what that means yet. When we do, we will publish a follow-up report. There is more information in both the Forbes and TheStreet articles, and we recommend them. In addition to the comments below, we have a thread on this topic in our forums.

The Mac Observer Spin:

This is an outrageous settlement offer, and unless the judge is as twisted as the judge in the Napster case, this settlement will be rejected. Just like the proposed settlement between the DoJ and Microsoft, this agreement leaves Microsoft free to continue its monopolistic ways with virtually no punishment at all. Even if the company will include Macs or its own Mac software in the payouts to these schools, Microsoft is still not being held accountable for its actions.

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