Microsoft Modifies Antitrust Settlement To Extend Education Sales At Apple's Expense
June 6th, 2003

Bloomberg is reporting that Microsoft has agreed to a modified settlement in the California class-action lawsuit the company lost in 1991. Bloomberg's title is "Microsoft alters settlement to address Apple concerns," but I think that a better title is "Microsoft is still a predatory monopolist that insists on trying to use monopoly settlements to further extend its market share."

The background

Microsoft is an abusive monopoly, whose monopoly power was found to be illegal. Unfortunately, the DoJ sold out the American people and did absolutely nothing to punish the company, with a little help from a Federal judge who cosigned the note with her rubber stamp of approval.

Though the Feds had no interest in restoring competition in the marketplace, several packs of ravenous private attorneys knew how to leverage Microsoft's monopoly conviction, suing the aglets off the company in the pursuit of damage awards. A few of those lawsuits achieved class-action status, including one in California.

Microsoft settled that case, presumably because it knew it would lose, and agreed to pay US$1.1 billion in the form of vouchers to California residents who could claim that they bought Windows during a specified time frame.

All of that is fine and dandy, until we get to what would happen to any unclaimed money. According to the settlement, Microsoft would take that unclaimed money and donate it in the form of software -- Microsoft software, software that costs the company almost nothing -- to California's poorest schools. The company had tried to do something similar in a national antitrust settlement, too, where it was laughed out of court.


There are two things that bother me about this sort of thing. For one, it is a base attempt to pander to a social and political hot button phrase, "poorest schools." It's like a politician saying we have to "protect/feed/give haircuts to the children" so that voters will hear it and say "That politician, he loves the children. He's always fighting for them."

It's just disgusting, but it's even more stunning that Big Redmond seems to think no one will realize they are seeing a back alley Three Card Monty in action.

Fortunately, that hasn't been the case so far. Apple protested the agreement, as is it did with the national settlement, and the California judge overseeing the case agreed. The settlement was sent back to the parties to work out something more reasonable.

The second thing that bothers me, as John Kheit talked about at length in 2002, The Idiots talked about at length in 2001, and I have repeatedly talked about since this nonsense first made the news, is that it is really nothing more than an attempt to gain market share in education. On top of that, it's an attempt being made at schools that can hardly afford the perpetual Microsoft tax after the donations run out, those before-mentioned poorest schools.

It's unbelievable.

Insult, injury, and arrogance

It gets worse. As I said, Microsoft has changed the California settlement "to address Apple's concerns," only it hardly addresses a damned thing. Instead of donating the money in the form of software, Microsoft will supply vouchers to schools so that they can buy what they want, from whom they want. From the Bloomberg story, via The Detroit News:

"All along it was our intention that this settlement be platform neutral so when we received some comment, we took steps to assure everyone," said Richard Wallis, Microsoft's associate general counsel. "We're not aware of any planned challenges" to the settlement.

The initial agreement, seen as a bellwether for possible settlements of similar consumer suits pending in several other states, was criticized by Apple, whose U.S. school sales have declined. The maker of iMac computers said the settlement amounted to unfair competition and said schools should get cash only to buy any technology products they want.

The revised settlement, which would settle 26 consumer suits, would provide only vouchers for hardware and software.

"We certainly listened to industry feedback and acted on it," said Wallis.

The small print

All of that sounds fine and dandy, until you look at the details. In the last paragraph of the Bloomberg article, was this:

Vouchers are good for software "produced by other companies that compete with and/or have substantially similar functionality to" Microsoft Windows, Word, Excel and Office, the agreement says.

This is nothing but more of the same ol' shameless chicanery. It's back room hucksterism at its finest, or worst, depending on which side of the fence you are. By limiting the vouchers for purchase software that meets that very, very narrow set of guidelines, the company is all but insuring it will still be Microsoft software that is purchased. It is clear, it is deliberate, and it is absolutely outrageous. This is a damage award for an antitrust case, and in my opinion, a reasonable settlement will have the company forking up the cash and let schools buy whatever they need with no strings attached, be it computers, software, books, or chalk.

The name of this pudding is "The Proof"

That Microsoft continues to try such antics in all of its antitrust cases is further evidence the company has done nothing to change its character, and is still the exact same predatory monopolist intent on leveraging its monopoly power to extend its market share into new markets at any cost. Note that in the recently settled case with AOL, included with the US$750 million check written to AOL was an agreement that could have AOL using Microsoft software for delivering online digital content. In all of the other cases in which a settlement has been reached, Microsoft has, without fail, attempted to win new market share as part of the settlement. It's mind boggling in its brazen affront to reason.

Then again, with a blank check from a bankrupt DoJ that has proven it has no interest in pursuing corporate wrongdoers, maybe Big Redmond is right to think it can get away with this crap.