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Apple Protests Microsoft/California Settlement In Sharply Worded Statement

Apple Protests Microsoft/California Settlement In Sharply Worded Statement

by , 10:00 AM EST, January 14th, 2003

It seems that Big Redmond had settled a 3 year old antitrust lawsuit filed by the state of California. In the settlement Microsoft will offer vouchers to to any of its customers who meet the terms of the settlement, the vouchers, ranging in amounts from $5 to $29, could then be used by the affected customers to buy hardware or software from any vendor. Microsoft could wind up paying $1.1 billion if all of the claims are filed which, historically, is not the case. Statistically only about 1/3 of the people and businesses who qualify for similar voucher actually get their share, but the settlement takes that into account too by dividing the unclaimed cash: Microsoft will get to keep 1/3 while the remaining 2/3 will go to California Public Schools in the from of free Microsoft software and grants.

Not so fast, says Apple, who filed an objection to the terms of the California settle on Firday, Jan. 10, 2003. Apple points a finger to the fine print and notes that Microsoft, in a roundabout way, is using its huge size and the terms of the agreement to make huge inroads into the California's education market, a market where Apple is still a major, if not the top, player. Here are the details from the C|Net News article titled Apple objects to Microsoft settlement :

Apple's complaint largely revolves around the destiny of funds that are not claimed by individuals and businesses who qualify for rebate vouchers under the US$1.1 billion settlement.

Under the settlement terms, one-third of any unclaimed rebates will revert to Microsoft. The remaining amount will go to California public schools in a mix of cash and donated Microsoft software.

Such a settlement lets Microsoft off easy, Apple said Monday, because history shows that fewer than 25 percent of qualifying recipients fail to claim refunds, thereby reducing the actual cost to Microsoft.

At the same time, Apple said school donations would help Microsoft expand its market share in education. Apple once led the education market, but has been surpassed by PC maker Dell.

Instead, Apple proposed that Microsoft give all unclaimed funds to schools to purchase any technology products. Under the settlement terms, individuals and businesses can use the rebates to buy any technology product from any vendor.

"Apple strongly believes that Microsoft should make the entire pool of unclaimed voucher funds available to our schools to purchase any technology products that best meet their needs," the company said in a statement provided to CNET "Remember--this is a settlement imposed against Microsoft for breaking the law, and it should not allow them to unfairly compete in education--one of the few remaining markets where they don't have monopoly power."

Check out the full article at C|Net News. This mirrors a settlement that Microsoft tried to make with another nationwide class-action antitrust suit in December of 2001, in which Microsoft tried to offer a huge payoff to "poor schools" . In that case, competitors, including Apple, protested the settlement for the same reasons that Apple is protesting this one.

The Electronic Freedom Foundation also heavily criticized the settlement, according to a report by the AP.

The Mac Observer Spin:

Microsoft simply can not let any opportunity slip by that could let the company expand its market share. Some call that good business, but when it is being built on the back of an antitrust settlement, it's just disgusting.

As we said in our Spin from the 2001 coverage, donating Microsoft software and Wintel hardware to "poor schools" is a cynical attempt to play on emotion to make the settlement more palatable to people. Who wants to be seen as trying to keep our poorest children from getting better tools? Kudos to Apple and Steve Jobs for once again having the political will to stand up and call this settlement what it is: yet another attempt by Microsoft to extend its presence in another market by leveraging its monopoly power.

The problem is that the attorneys in the case are more intent on getting a big settlement so that they can get a big fee out of the whole deal, than they are in any sort of actual antitrust "punishment." That's why this suit was filed in the first place. The plaintiff attorneys don't care where that money goes, or how it is spent, and it's much easier to get a settlement with Big Redmond when that company knows that the settlement will simply help them out. It's cynical, disgusting, and shameful.

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