Apple: Microsoft settlement in California not enough

Jim Dalrymple, MacCentral   Today’s Top Stories   or  Other Legislation/Regulation Stories  

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January 14, 2003 (MacWorld) -- In a deal to end the antitrust suit in California, Microsoft Corp. has proposed an estimated $1.1 billion settlement that could give money to customers and schoolchildren in the form of a voucher (see story). In a statement last night, Apple Computer Inc. says the proposed settlement doesn't go far enough.
Under the terms of the settlement, Microsoft will offer vouchers, ranging in amounts from $4 to $29, to California customers who purchased Microsoft software between Feb. 18, 1995, and Dec. 15, 2001 (see story). Two-thirds of the amount not claimed by individuals will be donated to 4,700 of California's neediest schools, according to Brad Smith, Microsoft general counsel, and Eugene Crew, lead counsel for Townsend and Townsend and Crew LLP, the San Francisco firm that brought the suit nearly four years ago.
But under the proposed deal, one-third of the value of the unclaimed vouchers reverts to Microsoft, which maintains no admission of fault or any violation of the law in the matter. Microsoft's attorneys pointed out that in many class-action cases, all unclaimed damages revert to the defendant.
Apple has a problem with the settlement because of the way the money given to the schools must be spent and because of the fact that only two-thirds of the voucher money not claimed by customers would go to the schools.
"Microsoft has proposed to offer vouchers to their customers as part of a California antitrust settlement. However, history tells us that less than 25% of customers redeem these types of vouchers, so to accurately evaluate Microsoft's offer we must focus on the fate of the unclaimed voucher funds," Apple said in a statement. "Under Microsoft's proposal, one-third of these unclaimed funds are taken back by Microsoft and not given to our schools. Another third can be used by schools only to purchase Microsoft software, leaving just the remaining third available for our schools to purchase the products of their choice."
Of course, Apple and other technology companies would like as much money as possible made available to the schools to purchase non-Microsoft products. The education market, once dominated by Apple, has been hotly contested over the past several years, but the Cupertino, Calif.-based computer maker has seen some major wins recently. For example, Henrico County, Va., and the state of Maine made major purchases of the company's iBook computer worth tens of millions of dollars.
"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," said Apple's statement. "Microsoft should not be allowed to recoup one-third of the unclaimed voucher funds and should not be allowed to dictate which technology our schools choose to buy with these funds. 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."
The settlement still must be presented to the judge, and potential class members must be given the option to not participate -- leaving open an individual's choice to appeal. After the Superior Court gives final approval, which Microsoft's attorneys estimate will happen by early fall, the class members get about four months to submit claims.

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