Here is article. WSJ articles tend to be very accurate, and the online version of the paper I much prefer to the paper, not to mention that it is about 1/6 the cost.
By JOHN R. WILKE
Staff Reporter of THE WALL STREET JOURNAL
Microsoft Corp. was widely portrayed as the victor in its antitrust settlement with the government. Now it is about to settle scores of private antitrust cases, and the winner could be public schools.
The Redmond, Wash., software maker tentatively has agreed to a five-year project to provide software and computers to more than 14,000 of the poorest schools in the U.S., resolving most of its pending private class-action lawsuits, lawyers and academics briefed on the case said. Many details of the complex agreement still were being worked out Monday night, but the estimated cost to Microsoft will be about $1.1 billion, with additional support coming from other contributions, these people said. Microsoft has $36 billion in cash on hand.
The unusual settlement is intended to answer claims that Microsoft abused its market power by overcharging millions of computer buyers across the country. The agreement, hammered out over the weekend in Redmond, must be approved by U.S. District Judge J. Frederick Motz in Baltimore, who is overseeing the class-action suits.
Many of the private suits that arose after the government filed suit against Microsoft in 1998 were dismissed because most buyers of new personal computers were only indirect purchasers of Microsoft's Windows operating system, leaving them no cause to sue in many states. Many remaining suits were consolidated under Judge Motz in Baltimore, and Microsoft vowed to fight them, even after it lost in the government suit.
The school-software proposal came from one of the lead plaintiffs' lawyers in the case, Michael Hausfeld, who concluded that each member of the plaintiff class -- at least 65 million computer buyers -- would receive as little as $10 in a settlement or court victory. That would be less than the cost of identifying class members and sending payment, meaning most of the money from Microsoft would be swallowed by administrative costs -- and attorney fees.
Another unusual feature of the proposal: The fees for Mr. Hausfeld, Stanley Chesley and a half-dozen other well-known class-action lawyers won't be tied to the size of the settlement, or taken from the settlement, as often happens in class-action cases. Instead, the judge will determine attorneys' fees and costs, to be paid separately by Microsoft, the lawyers close to the case said.
Some lawyers involved opposed the settlement, preferring to take Microsoft to court in hopes of winning a larger settlement -- and the attorneys' fees that might be expected from a more conventional damages award. Judge Motz is expected to sort out how to proceed in a hearing next Tuesday in Baltimore.
Lawyers opposed to the deal told a California state judge last week that the proposed national settlement of the private suits wouldn't curtail Microsoft's monopoly power and doesn't return enough to California consumers. It is unclear whether their opposition will be enough to stall the settlement of the private cases, though, and Judge Motz has the authority to overrule the state cases pending in California.
According to lawyers and others briefed on the deal, Microsoft would provide software valued at about $900 million over five years to schools where most students qualify for free federal lunch programs. Microsoft also would be responsible for making available 200,000 reconditioned computers and laptop computers during that period, $90 million in teacher training and $38 million in technical support. It would provide as much as $250 million to set up an independent foundation to meet project goals, and would seek an additional $200 million in matching funds.
Microsoft also would contribute an estimated $160 million to help fund an organization that teaches students how to repair and service computers and networks. The software will include many of Microsoft's best-selling titles, such as Microsoft Office and Encarta, and would be valued at educational-license prices, not at retail prices as originally proposed by the company, the lawyers and others close to the case said.
The agreement also includes minimum standards for the reconditioned computers, setting chip speeds and memory and requires accessories such as a color monitor, speakers and CD drive; these standards could be upgraded annually as needed. Microsoft also promises that its support for the new foundation will be in addition to its existing corporate charitable giving.
If the settlement goes through, Microsoft's brand name and products will gain even greater presence in the nation's schools. Some of the lawyers in the class-action cases were uncomfortable with this but concluded that Microsoft's monopoly already is so pervasive that students would have to learn to use these products anyway in the workplace.
If approved, the settlement will dismiss more than 100 private antitrust suits. The deal won't release the company from any liability regarding its latest product, Windows XP, however.
The first trial in the private cases wasn't scheduled to begin until next year and could have gone on for years with appeals. As a result, according to a person who was briefed on the deliberations among plaintiffs' lawyers, Mr. Hausfeld and Mr. Chesley argued that the educational approach would have far greater social impact now than an eventual award, perhaps years from now, in which computer owners received a $7 or $10 check.
Write to John R. Wilke at john.wilke@wsj.com |
