A federal judge Friday rejected the terms of a $1 billion antitrust settlement in which Microsoft had agreed to provide cash, computers and software to the nation"s neediest schools. If approved, the settlement would have done away with more than a hundred class-action suits against the company.
In a withering deconstruction of the settlement terms, U.S. District Judge J. Frederick Motz, in essence saying the pact was like a wolf in sheep"s clothing, noting the proposed settlement"s "potential adverse impact upon competition." (MSNBC is a Microsoft-NBC joint venture.)
"On its face the agreement is entirely "platform neutral,"" writes the Motz, because it allows schools to apply for donations of either Apple"s Macintosh computers or Windows-based PCs. In addition, the settlement terms also allow schools to purchase non-Microsoft software.
But the darker angels of Microsoft"s deal are in the details, as the judge dug deeper.
The settlement "raises legitimate questions since it appears to provide a means for flooding a 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 software," the judge said.
The settlement provides for up to 200,000 refurbished computers to be made available; however, 95 percent of computers donated for refurbishing run Microsoft software, the judge notes, and thus, schools looking for the biggest bang for their buck would most likely choose the Windows-based machines.
"A reasonably foreseeable effect... would be to increase the number of PCs, both absolutely and in comparison to Macs, being used in the eligible schools," Motz wrote in his decision.
Further, the promise of Microsoft to give away its software also raised the judge"s eyebrows, who said, in siding with opponents of the settlement terms, that such an action "to put it bluntly... could be viewed as constituting "court approved predatory pricing.""
Microsoft said it was "confident" that it "ultimately will prevail in these lawsuits" and that it was disappointed to have missed an opportunity to settle the case and help the nation"s neediest schools.