In another twist to the controversial settlement proposed by software giant Microsoft Corp. to end private antitrust suits against it, rival Apple Computer Inc. said it will file a supplemental briefing with the federal judge overseeing the hearings Dec. 7.

Under the settlement, which is intended to resolve claims that Microsoft overcharged consumers for its products, Microsoft would provide $1 billion in software, support, and other aid to the nation’s poorest public schools.

But in a statement issued Dec. 6, Apple chief executive Steve Jobs said the settlement actually will cost Microsoft less than $1 million.

“The centerpiece of Microsoft’s proposed $1 billion civil antitrust settlement is their donation of Microsoft software, which they value at $830 million, to our schools. We think people should know that the actual costs to Microsoft for this donated software will likely be under $1 million,” Jobs said.

“We think a far better settlement is for Microsoft to give their proposed $1 billion—in cash—to an independent foundation, which will provide our most needy schools with the computer technology of their choice.”

Microsoft’s proposal was submitted to the Federal District Court of Maryland Nov. 20. It is awaiting approval by U.S. District Judge J. Frederick Motz, who is overseeing the class-action suits. The suits stem from antitrust litigation originally filed by the U.S. Justice Department.

If accepted, the settlement would provide cash, refurbished computers, software, technical assistance, and training to all qualifying schools—those with 70 percent or more of their students receiving free or reduced-priced lunches, or about 16,000 schools in all, according to Microsoft estimates.

“It is a settlement that avoids long and costly litigation for the company and … really makes a difference in the lives of millions of schoolchildren in some of the most economically disadvantaged schools in the country,” said Microsoft’s chief executive, Steve Ballmer.

Critics contend the proposal will only enhance Microsoft’s access to the education market, while providing inadequate funding to meet the poorest schools’ needs.

Jobs previously blasted the proposed settlement in a Nov. 27 statement.

“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,” he said.

Jobs isn’t alone in his criticism. Another Microsoft rival, Red Hat Inc., also issued a counterproposal that focuses on how much money Microsoft actually would have to spend if the courts were to accept its settlement offer.

In its counterproposal, Red Hat—which makes a version of the Linux open-source operating system—offered to give its software to every school district in the nation for free. As a result, the company said, Microsoft could focus on buying hardware, instead of software, for the estimated 16,000 eligible schools.

“While we applaud Microsoft for raising the idea of helping poorer schools as part of the penalty phase … for monopolistic practices, we do not think that the remedy should be a mechanism by which Microsoft can further extend its monopoly,” said Matthew Szulik, chief executive officer of Red Hat.

Red Hat said it would give its open-source Red Hat Linux operating system, office applications, and associated capabilities to any school system in the United States at no charge. Red Hat also will offer online support for the software through the Red Hat Network, which currently is a fee-based service.

Unlike the Microsoft settlement, which is guaranteed for five years, Red Hat’s offer has no time limit, the company said.

“Initially, I just found it humorous, since you can download Red Hat’s software for free already. However, since the offer includes Red Hat Network [support], this becomes a much more serious offer, as that service does involve some direct costs to Red Hat,” said Kyle Hutson, director of technology for the Rock Creek School District in Kansas.

Norris Dickard, senior associate of the Benton Foundation, which focuses on digital divide issues, said the counterproposals are “part of a ‘tit for tat’ among competitors.”

“Competitors … feel that Microsoft is using this deal to get out of numerous lawsuits and extend its monopolistic position by getting [schools] hooked on its software, while looking good in doing so,” Dickard said.

U.S. District Judge Motz is expected to rule on the proposed settlement in mid-December.


Microsoft Corp.

Apple Computer Inc.

Red Hat Inc.