Microsoft Settles Pricing Suits

After finally reaching a deal in its antitrust battle against the U.S. Department of Justice and nine states earlier this month, Microsoft is also settling more than 100 private suits that complained of predatory pricing practices.

Under the deal, Microsoft will provide more than $1 billion in cash, software, training, and support to more than 12,500 schools in the country's most economically disadvantaged areas. Microsoft officials confirmed the deal Tuesday morning.

The schools that will benefit are those in which at least 70 percent of the students qualify for the federal free or reduced lunch programs, say representatives of both sides. Microsoft will also supply some 200,000 reconditioned PCs and laptops, according to representatives of both sides of the court action. In addition, the software maker will be responsible for providing a total of $160 million to pay for technical support, and another $90 million for teacher training. The company will also contribute software, which Microsoft estimates in value at $500 million based on its reduced pricing for academia.

To carry out the order, Microsoft plans to establish a national foundation that will make grants to community organizations for purchasing computers and software. The company will seed the national foundation with a $150 million grant and will make an additional $100 million available to match donations from other sources.

Approval Expected

The deal is due to be approved by U.S. District Judge J. Frederick Motz in Baltimore, who is overseeing the class action suits. A hearing on the matter is scheduled for November 27.

A representative for Washington D.C.-based Cohen, Milstein, Hausfeld, and Toll P.L.L.C. had earlier confirmed some proposed settlement.

Plaintiffs in the private antitrust lawsuits claim that Microsoft used a desktop operating system monopoly to force users to pay inflated prices for the company's software. The proposed deal would settle a majority of the private antitrust suits, leaving just those centered around the company's new Windows XP operating system still up in the air, the representative said.

The school-software proposal was introduced by the plaintiffs' lead attorney, Michael D. Hausfeld, when it was determined that the sheer number of individual members of the plaintiffs' cases--at least 65 million--could reduce a successful settlement bid to some $10 apiece.

Microsoft is already a substantial donor to educational programs. The company last year gave more than $215 million in cash and software to nearly 5000 nonprofit organizations, according to Microsoft representatives.

Remaining Claims

While Microsoft has settled its federal antitrust suit, it still faces antitrust accusations in diverse courts. Ten states originally part of the Department of Justice action are pursuing a separate action. Also, the European Union is still investigating charges of illicit antitrust actions overseas.

When announcing the settlement deal for the class action suits, Microsoft CEO Steve Ballmer expressed hope that the remaining state attorneys general would be willing to similarly settle their antitrust suit.

After the initial finding that Microsoft is indeed a monopoly, a number of related suits sprouted.

No one at Microsoft was immediately available for comment Tuesday morning. Microsoft routinely declines to comment on court matters, at least while still under consideration.