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Microsoft Acts on Apple's Complaint

The computer giant says that as part of its California antitrust settlement schools can decide whose software they will receive.

June 06, 2003|From Bloomberg News

Microsoft Corp., which agreed to pay $1.1 billion to settle antitrust claims in California, said Thursday that it dropped a provision in the agreement that would have given the company's software to schools at no charge.

Schools that are awarded vouchers under the revised settlement can receive any manufacturer's technology product, according to court documents filed in San Francisco.

Previously, Microsoft had planned to give schools either free Microsoft software or cash to buy any computer products.

The change could avert a possible challenge to the settlement by Apple Computer Inc., which competes with Microsoft for the education market and complained about the initial accord. In 2001, Apple helped derail a proposed antitrust settlement over the issue of software to schools.

School sales accounted last year for more than one-fifth of Apple's revenue.

"It takes the lock off and allows schools to decide who they will buy from," said Ernest Gellhorn, who teaches antitrust law at George Mason University law school.

Microsoft settled a lawsuit in January filed by California consumers who claimed that Microsoft's monopoly of operating systems software led to higher prices.

As part of the agreement, Microsoft pledged to give schools a portion of whatever part of the $1.1-billion settlement wasn't claimed by consumers.

Attorneys representing the California consumers negotiated the changes to the settlement with Microsoft. The accord is subject to a judge's approval.

The initial agreement, seen as a bellwether for possible settlements of similar consumer suits pending in several other states, was criticized by Apple, whose education sales fell 15% in 2002 as schools struggled with budget cuts.

The maker of iMac computers said that the settlement amounted to unfair competition and that schools should get cash to buy any technology products they want.

The revised settlement would provide only vouchers for hardware and software.

"We certainly listened to industry feedback and acted on it," said Richard Wallis, Microsoft's associate general counsel.

Microsoft's shares fell 78 cents to $24.09. Apple's shares rose 4 cents to $17.64. Both trade on Nasdaq.

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