Apple objects to Microsoft settlement

14 Jan 2003 09:20

A £700m antitrust settlement between California and Microsoft would actually benefit the software giant, particularly in the education market, according to Apple

Apple on Monday objected to a tentative antitrust settlement between California and Microsoft, saying the agreement will actually benefit the software giant.

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 $1.1bn, or about £704m, 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 on 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. "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 lawsuit, filed in February 1999, claimed that Microsoft violated California antitrust laws by overcharging by as much as $40 for every copy of Windows 95 and 98. Microsoft dominates the desktop market, and a federal judge ruled in November 1999 that the company violated US antitrust laws.

If the settlement is approved by the trial judge, Microsoft will give refund vouchers, collectively worth potentially $1.1bn, to those who bought Windows or select applications between 18 February, 1995 and 15 December, 2001.

Although the maximum value of the settlement is $1.1bn, Microsoft could end up paying as little as $367m in cash to California public schools. If all vouchers are claimed, Microsoft pays the maximum.

Apple objected to a similar settlement proposal in a Maryland class-action lawsuit. In that case, the judge rejected a settlement that would have required Microsoft to provide cash grants and software to schools. That settlement, however, did not include giving vouchers to software buyers.

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