Microsoft’s settlement plan is self-serving, critics charge

Associated Press

BALTIMORE — Apple Computer Inc.’s Steve Jobs, whose blunt criticism of Microsoft Corp. has tempered in recent years after his archrival invested millions in his company, on Tuesday said he was "baffled" by a proposed settlement to the software giant’s consumer class-action lawsuits.

Under the proposal unveiled last week, Microsoft and some plaintiffs agreed the company would provide more than $1 billion worth of Microsoft software, refurbished personal computers and other resources to more than 12,500 of the nation’s poorest schools.

Critics contend the proposal will only serve to enhance Microsoft’s access in schools while doing little to meet the poorest schools’ extensive needs.

"We’re baffled that a settlement imposed against Microsoft for breaking the law should allow, even encourage, them to unfairly make inroads into education — one of the few markets left where they don’t have monopoly power," Jobs said in a statement.

Educators, lawyers and technology experts on both sides were in court Tuesday to argue the settlement’s merits before U.S. District Judge Frederick Motz in Baltimore. It wasn’t clear when he would make a ruling.

Some lawyers who attended Tuesday’s hearing, including the lead counsel for plaintiffs in California, have objected to the settlement, calling it inadequate.

And Apple, which says it controls about 47 percent of the K-12 education market, filed a brief arguing that the settlement would only further Microsoft’s monopoly power — the concern that prompted the lawsuits in the first place.

"If this is a settlement against harm that occurred in the marketplace, the last thing you want the settlement to do now is bring that harm to the one sector where there’s been a very broad choice," said Linda Roberts, who directed the Clinton administration’s educational technology program and now consults for companies including Apple.

Microsoft claims the deal does not impede competition because it allows schools to choose to spend money on training and resources for non-Microsoft products. But the company concedes that those who go with Microsoft products will be given more resources, such as free software.

"The actual settlement is made up of a basket of resources," said Mark East, worldwide general manager of Microsoft’s education solutions group. "The software component is just one of the elements."

Microsoft and Apple, once fierce rivals, have been on relatively friendly terms since 1997, when Microsoft made a $150 million investment in its rival to help keep Apple afloat.

But analyst Rob Enderle of Giga Information Systems said he wasn’t surprised that Apple is responding so aggressively. "Apple is clearly the company that could be the most damaged" by the proposal, he said.

In court, Keith Leffler, an economist who specializes in antitrust issues, argued that the dominance of computers that operate using Windows software is based on simple user preference.

"The world is moving toward PCs, away from Apple. It has nothing to do with this," said Leffler, who testified on behalf of lawyers’ who negotiated the settlement.

And Michael Hausfeld, one of the plaintiffs’ lawyers in favor of the settlement, said it would help close the digital divide — the gap between affluent students, who generally have easy access to technology, and poor students, who do not.

Hausfeld said if consumers pursued their claim against Microsoft and eventually won the case, they would stand to recover as little as $6 each before court costs were deducted.