Microsoft Settles Private Antitrust Suits

SEATTLE – Microsoft Corp. has reached a settlement in most of the private antitrust lawsuits filed against the software giant, a lawyer for some of the plaintiffs confirmed Tuesday.

Michael Hausfeld, representing a group of private plaintiffs in Washington, D.C., said in a telephone interview that Microsoft has agreed to provide more than $1 billion worth of software, training and computers to thousands of the nation's poorest schools over five years.

Microsoft had no immediate comment but scheduled a conference call to discuss the matter later in the day.

The settlement would 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. However, it must first be approved by U.S. District Judge J. Frederick Motz in Baltimore, who is overseeing the class-action suits.

The deal has yet to be signed, Hausfeld said, although the two sides have agreed to terms. It is expected to be presented to Motz on Wednesday, and a hearing to discuss the settlement is scheduled for next Tuesday in Baltimore.

Microsoft was hit with a host of private lawsuits claiming antitrust violations after the government filed its antitrust suit against the software company in 1998. Many states dismissed the suits because new computer buyers did not buy the Windows operating system directly. The remaining cases were consolidated under Motz.

Hausfeld said he originally thought of the unorthodox settlement idea about nine months ago after realizing that each of the 65 million computer buyers eligible to gain from the settlement would likely receive only about $10 if they won the case or a settlement were reached.

Hausfeld and other lawyers consulted with academics and other education experts, then worked with Microsoft to hammer out final terms of the deal, he said.

Hausfeld conceded that some lawyers, including several representing plaintiffs in California, oppose the deal. Those lawyers told a California state judge last week that such a settlement would do little to curtail Microsoft's power and wouldn't return enough to California customers, The Wall Street Journal reported.

But Hausfeld said he felt it was the government's job to find a way to curtail Microsoft's power, and that it was unrealistic to expect that a better deal could be reached for such a large class-action group.

"(The settlement) was to find a practical way of resolving probably the most numerous class ever affected by a single course of conduct," he said.

"The people that we spoke with — our clients — felt that this was a tremendous social benefit," he said.

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

The remaining nine states suing Microsoft are scheduled to tell a judge in December how the company should be punished for hurting competition.

Because Motz has the power to overrule the California cases, it was not clear whether those lawyers' opposition would stall the private settlement. Those issues are to be addressed at the preliminary approval hearing Tuesday.