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Jobs slams Microsoft settlement

Apple Computer chief Steve Jobs last week criticized the latest Microsoft plan to settle more than 100 private antitrust cases. The Redmond software maker has proposed to make amends by donating $1 billion worth of software, PCs, training, and support to the nation's poorest public schools.

The plaintiffs in those cases, filed on behalf of consumers, accused Microsoft of using its alleged monopoly power to overcharge consumers for Windows 95 and Windows 98. The proposed settlement would relieve Microsoft of any pending claims that accuse the company of using its Windows monopoly to charge extra money for the OS and popular apps, such as Microsoft Office.

At a public hearing last week in Baltimore, educators, lawyers, and technology experts on both sides argued the deal's merits. Jobs and others expressed concerns to US District Judge J. Frederick Motz that the proposed settlement would further entrench the company's Windows monopoly.

"We're baffled that a settlement imposed against Microsoft for breaking the law should allow, even encourage, them to unfairly make inroads into education—one of the few markets left where they don't have monopoly," Jobs said.

Apple filed a 34-page objection to the settlement. In it, the Cupertino, CA-based company asserted that the settlement "would heavily promote and subsidize the schools' acquisition of Microsoft products at the expense of more effective and appropriate alternatives."

Apple may be "baffled" over Microsoft's settlement proposal, but no one else is. The educational market has long been critical to Apple. Until last year, the company was number one in sales to US educational institutions. Dell edged into first place in 2000, grabbing a 17.3 percent market share to Apple's 13.9 percent in the $12 billion U.S. market, according to market researcher IDC. With millions more Windows-based machines in the schools, Apple's grip on that market—and future computer users—is likely to slip further.

The judge seems to agree with the Apple argument. Motz allowed that providing free copies of Windows might encourage schools to rely even more on computers compatible with Microsoft's software. Each school will choose whatever "would get the most bang for its buck," the judge said. Motz must approve the settlement proposal, but he has yet to indicate when he will rule on it.

The numbers in the proposed settlement are impressive: Microsoft would pay $160 million for technology-support programs, contribute $90 million for training of teachers and other personnel, and donate software it values at more than $500 million.

A week earlier, Linux distributor Red Hat offered to provide its version of the open-source OS free to every school in the country, ostensibly to free the schools of the grip of a proprietary system, and freeing up Microsoft for more hardware (eADT, Nov. 26).

For more on E-Business, go to: http://www.adtmag.com/section.asp?section=specialreport.

About the Author

John K. Waters is a freelance writer based in Silicon Valley. He can be reached at john@watersworks.com.

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