Weeks after agreeing a deal with the US Department of Justice, Microsoft is inching closer to arranging a settlement of the numerous private suits that allege the company overcharged for its software.
Analysts call Microsoft's settlement a victory for public relations, rather than of justice. The deal involves Microsoft supplying computers and software to over 14,000 of the US's poorest schools over the next five years. Cnet reports that this decision could actually damage Apple's educational sales, rather than cause Microsoft problems.
Plaintiffs in the private antitrust lawsuits claim Microsoft used its operating-system monopoly to force users to pay inflated prices for the company's software. The settlement was agreed Monday, but must be approved by the US Federal District Court of Maryland.
Long litigation Microsoft CEO Steve Ballmer said yesterday: "I'm pleased to announce that we have reached a settlement in over 100 private class-action suits that avoids long and costly litigation for the company."
Microsoft will provide software to all elementary, secondary and high schools where at least 70 per cent of the students qualify for the federal free or reduced lunch programs. This is estimated to comprise about 14 per cent of US schools. The software maker will also provide upon request an array of educational and productivity software for all desktop and laptop PCs either already owned by eligible schools, or purchased during the five-year settlement period. Microsoft estimates the settlement will begin next year if the court approves it. Microsoft says the cost will exceed $500 million.
Microsoft also agreed to supply 200,000 "Pentium-class" PCs and Macintosh computers to eligible schools each year during the five-year settlement period, as well as providing $90 million in teacher training over the five-year period.
Education foundation Finally, Microsoft will be responsible for creating a national foundation that gives grants to local and community organizations for purchasing computers and software. The foundation's charter would be to provide long-term funding for schools outside the settlement remit.
Microsoft is responsible for making a $150 million grant to the foundation while setting aside another $100 million to match other contributions. In addition, the software maker has to shell out another $160 million for a separate fund overseen by the foundation to give technology support to participating schools.
A conservative estimate pegs Microsoft's total cost for the agreement at $1.1 billion.
Ross Rubin, Jupiter Media Metrix research director, said: "Clearly it's a publicity coup for Microsoft. It doesn't smack of any punishment."