Microsoft proposes settlement that could threaten Apple in California schools

“Apple Computer, formerly the undisputed leader in sales of personal computers to schools, has steadily lost ground over the years to lower-priced PCs that run Microsoft Windows software. And these days the company faces another threat in the education market: a proposed class-action legal settlement by Microsoft that could result in the donation of hundreds of millions of dollars of Microsoft software to needy schools throughout California.”

“Under the deal proposed last month, Microsoft would offer more than $1 billion in vouchers, ranging in price from $5 to $29, for technology from Microsoft and its competitors to California consumers who bought Windows, Office and other Microsoft products from 1995 to 2001. Once the settlement period was over, Microsoft would then donate two-thirds of any unclaimed proceeds to the state’s 4,700 neediest schools — primarily in the form of Microsoft software and technology; the other third would revert back to Microsoft.”

“In Apple’s view, the deal to resolve the California consumers’ lawsuit would not only let Microsoft off easily by giving some of the money back to the company, but would also turn what should have been a punishment for anticompetitive behavior into a means for Microsoft to build a bigger share of the state’s school software market.”

“‘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,’ Apple said in a statement last month, after the proposed settlement was announced. ‘Microsoft should not be allowed to dictate which technology our schools choose to buy with these funds.'”

“The settlement is still subject to a judge’s approval. Microsoft, determined to secure the deal and avoid another prolonged legal battle, has been negotiating to try to make the arrangement more palatable to Apple. ‘We understand there may be concerns,’ said Jim Desler, a Microsoft spokesman, ‘and we’re open to ways we can address them within the structure of what we think is a competitively neutral agreement.'”

“A year ago Apple opposed a similar proposed settlement that would have ended more than 100 private class-action lawsuits against Microsoft around the country. In that deal, Microsoft would have given $1 billion in money, software, services and training to about 12,500 public schools, as well as Windows licenses and refurbished PCs. A federal judge threw out the settlement, saying it could adversely affect competition.”

“The judge, J. Frederick Motz of the U.S. District Court in Baltimore, wrote in his ruling that the proposed settlement appeared to provide ‘a means for flooding part of the kindergarten-through-high-school market — in which Microsoft has not traditionally been the strongest player, particularly in relation to Apple — with Microsoft software and refurbished PCs,'” reports The New York Times. Full article here.

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