Microsoft Class Action Settlement Meets Brief Resistance From Judge

Perhaps Bill Neukom resigned his position with Microsoft too soon, as the last settlement deal he negotiated has continued to come under fire, this time from the Judge presiding over the case. For those who havenit been keeping up with this development, this settlement is in regards to a massive class action against the company alleging the company overcharged for its products based on its status as a monopolist. That status was first decided by Judge Penfield Jackson in the original DoJ antitrust trial, and upheld by an appellate court earlier this year. The settlement offer has Microsoft donating from US$550 million to US$1 billion in software, hardware, and services to some 12,500 of the USis poorest schools.

Many critics of the settlement offer have charged that it simply offers Microsoft a huge competitive edge in yet another market, the education market, a market that Apple considers important to its own business model. Now the company is facing criticism from the judge presiding over the case, though it may not be enough to get the settlement rejected outright. The root of the new criticism is that estimates of the harm to the economy caused by Microsoft being tossed around in the case has been changed from US$2.1 billion to US$5.15 billion, which means that the plaintiffs could conceivably extract more money from Microsoft if it went to trial. From a Reuters report:

Microsoft and most of the class action attorneys in the case are in favor of a deal that would require the company to spend more than $1 billion to put software and computers into some of the poorest U.S. schools.

But some lawyers in the case say the deal is a fraction of what Microsoft owes for abusing its monopoly over personal computer operating systems and overcharging millions of people for software.

Keith Leffler, an economics professor at the University of Washington testifying on behalf of plaintiffs lawyers wishing to settle, said that the $2.1 billion amount he had mentioned previously should have been $5.15 billion.

U.S. District Judge J. Frederick Motz called the earlier estimate a "dramatically incorrect figure" that raised doubts about the settlement deal.

"It seems to me youive got to go back to square one to get back to square five," Motz said.

But Motz then appeared to accept the explanation of attorneys in favor of settlement who said the incorrect figure had not been used during settlement negotiations.

There is additional information in the full article, and we encourage you to read it.