Apple criticizes Microsoft settlement proposal

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Last week Microsoft Corp. floated a proposal to settle various private suits. Microsoft proposed the donation of software, training services, and refurbished computer hardware to 14,000 of the nation's poorest schools in its quest to quell the suits. Today Apple responded to the Microsoft proposal with a legal brief and critical comments from CEO Steve Jobs.

Jobs noted that around half of the computers in education today are Apple computers, and he said that his company is the second largest supplier overall and the largest supplier of portable computers to the educational market.

"Given this, 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 power," said Jobs. Today our schools have a choice, and to date they have chosen Apple around half of the time. We think our schools deserve to keep their power of choice, and our kids deserve better than having to learn on old, refurbished Wintel computers."

The brief was filed in the U.S. District Court for the District of Maryland, by the law firm of O'Melveny & Myers LLP on behalf of Apple. In the 36 page brief, a copy of which MacCentral received, the attorneys note that "Each part of the settlement must be carefully examined and changed where necessary to eliminate those aspects that will irresistibly compel schools to adopt Microsoft products, even where superior products are available from other sources."

The brief provided examples of this apparent favoritism towards Microsoft, including a provision that calls for the award of grants to be placed under Microsoft's control, which the firm suggested may defer educational institutions from making grant requests to purchase non-Microsoft technology. And while the settlement claims to be platform-neutral, Apple's attorneys indicated that the terms provide hundreds of millions of dollars to be used to promote and subsidize the purchase of Microsoft products. Training and technical support is also under Microsoft's exclusive aegis, too, said Apple's lawyers.

Citing a previous antitrust case in which the proposed settlement would have provided the defendant with "substantial future marketing advantages" by instituting a couponing plan, Apple's counsel noted "In this case, the proposed settlement goes well beyond a simple coupon program that an antitrust defendant could manipulate to promote a single product line to general consumers. Here, the proposed settlement will enable Microsoft to leverage its monopoly power and thereby dramatically increase its penetration of a market segment that has heretofore resisted its total control."

Suggesting that the proposal is flawed but can be corrected, attorneys representing Apple added, "The laudable goal of helping poor schools does not require a program that expands Microsoft's monopoly power. The settlement can, and should, be restructured to maximize benefits to poor schools, insure freedom of choice and preserve competition."

This story, "Apple criticizes Microsoft settlement proposal" was originally published by PCWorld.

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