Microsoft offers $1bn deal to settle lawsuits

Software giant Microsoft says it will give some of America’s poorest schools more than a billion dollars in computers, software, training and cash to settle most of the private anti-trust lawsuits filed against the company.

But lawyers for some of the plaintiffs warned they would oppose the plan, calling it ‘‘pathetic and a sweetheart deal for Microsoft’’.

The proposed settlement, over five years, would pay for teacher training, technical support, refurbished computers and copies of Microsoft’s most popular software, such as Windows and Office, at more than 12,500 schools, company spokesman Matt Pilla said.

‘‘It is a settlement that avoids long and costly litigation for the company and at the same time I think it will really make a difference in the lives of some of the most disadvantaged students in the country,’’ Microsoft chief executive Steve Ballmer said yesterday.

Microsoft admits no wrongdoing.

The company said it would take a pretax charge of about $550m (stg£365m) in the current quarter ending December 31 to cover the proposed settlement. After taxes, the company expects to incur a charge of about $375m (stg£250m).

The settlement could put to rest most of the private lawsuits alleging that Microsoft abused its monopoly power in the software market and overcharged millions of computer buyers. But it still faces some hurdles.

Daniel Furniss, lead counsel for the plaintiffs in California, said some lawyers from California and at least three other states were not involved in the settlement negotiations after Microsoft spurned their more stringent proposals.

Furniss said the proposed deal did not provide enough money to sustain the school programmes and therefore would have no real long-term benefits. He also said it provided no real punishment for Microsoft, which had cash reserves of some $32bn (stg£21bn).

‘‘It’s pathetic and a sweetheart deal for Microsoft,’’ he said.

Tom Burt, Microsoft’s deputy general counsel, said the company did not realistically expect to appease all the plaintiffs and was confident the settlement will be approved.

US District Judge J Frederick Motz in Baltimore, who is overseeing the class-action suits, will hold a preliminary hearing next Tuesday to discuss the settlement. Because Motz has the power to overrule the California objections, it was not clear whether those lawyers’ opposition would stall the private settlement.

Microsoft was hit with dozens of private lawsuits claiming anti-trust violations after the government filed its anti-trust suit against the software company in 1998.

Many US states dismissed the suits because new computer buyers did not buy the Windows operating system directly. The remaining cases were consolidated under Motz.

Michael Hausfeld, representing a group of private plaintiffs in Washington, DC, said he proposed this type of settlement after realising that each of the 65 million computer buyers eligible under the class-action lawsuits would probably receive only about $10 (stg£6.50) if they won the case or a settlement were reached.

Microsoft has settled its anti-trust case with the federal government and nine of the 18 states that sued the company. A judge will review the settlement in March.

Denise Cardinal, spokeswoman for the National Education Association, applauded the settlement.

‘‘There is a great need out there, and we’re pleased to see a company that has such enormous resources willing to try and make a difference in America’s classrooms,’’ she said.