Apple Lashes Out at Microsoft Settlement

By Darryl K. Taft  |  Posted 2003-01-14

Apple Lashes Out at Microsoft Settlement

Despite Microsoft Corp.s moves to settle nagging antitrust cases that cloud its outlook, the company continues to receive criticism, complaints and renewed attacks from its competitors.

In reaction to the Redmond, Wash., software giants $1.1 billion settlement of a California class-action case, Apple Computer Inc. Monday night issued a statement criticizing the settlement proposal.

As part of the settlement announced last Friday, Microsoft pledged to donate two-thirds of the unclaimed funds—in the form of vouchers—to California schools, with one-third of the unclaimed funds going back to Microsoft.

Apple contends that in these types of cases, "fewer than 25 percent of customers redeem these types of vouchers." The Microsoft vouchers are available to customers who purchased Microsoft software between 1995 and 2001. The vouchers range in value from $5 to $29, depending on the product purchased.

In a statement, Apple said: "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. Microsoft should not be allowed to recoup one third of the unclaimed voucher funds and should not be allowed to dictate which technology our schools choose to buy with these funds. Remember—this is a settlement imposed against Microsoft for breaking the law, and it should not allow them to unfairly compete in education—one of the few remaining markets where they dont have monopoly power."

However, during a call with reporters to announce the settlement, Tom Burt, deputy general counsel at Microsoft, said schools will be able to redeem vouchers for software and hardware at their discretion and can use the funds to acquire technology and services from Apple or even to acquire open-source technology such as Linux.

Regarding the issue of giving 100 percent of the unclaimed funds to schools, Burt said the common practice in these kinds of settlements is for the company to recoup all the unclaimed funds.

Yet, education remains one area where Apple maintains a strong presence and has been able to take Microsoft on head-to-head. Apple objected in 2001 when Microsoft proposed to settle nationwide class-action suits by offering to donate software to schools in underprivileged areas. U.S. District Judge J. Frederick Motz rejected the settlement, saying it gave Microsoft an advantage.

Apple officials would not comment on whether they will file objections with the California judge that was to hear the cases.

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Meanwhile, in Washington, the Computer & Communications Industry Association Monday vowed to press on with an appeal of a federal judges ruling denying the organizations request to appeal Microsofts settlement with the federal government and several states.

U.S. District Judge Colleen Kollar-Kotelly rejected a request filed jointly by the CCIA and the Software & Information Industry Association to intervene in the case with an appeal of her ruling on the settlement. Both the CCIA and SIIA, which represent some of Microsofts most staunch foes including Sun Microsystems Inc., Oracle Corp. and AOL Time Warner Inc., are seeking more stringent remedies against Microsoft than those hammered out in the settlement.

Over the weekend, Kollar-Kotelly said the organizations lacked the necessary precedents to call for such action and said they should file their own private lawsuits.

The CCIA decided to pursue the case, filing a notice of appeal Monday to appeal Kollar-Kotellys weekend decision as well as her settlement decree.

CCIA officials said the settlement Kollar-Kotelly signed into order is not in the public interest, did not stop Microsofts monopolistic behavior and "was hopelessly vague, ambiguous and unenforceable."

Former Judge Robert Bork, former Judge Ken Starr and Glenn Manishin of the law firm of Kelley Drye & Warren filed the CCIAs notice of appeal.

The CCIA joins the states of Massachusetts and West Virginia in appealing the settlement.

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