Apple wants MS to give schools cash, not software

Apple Computer is urging a U.S. District Court to reject a proposed antitrust settlement between Microsoft and a group of private parties because of concerns that Microsoft is using the deal in an attempt to dominate the education market, according to a court document filed Friday.

The suits at issue are separate from the U.S. government's case against the Redmond, Washington-based software company and are composed of more than 100 private lawsuits. The proposed settlement of the private lawsuits would see Microsoft donating US$1 billion worth of software and services to disadvantaged schools. Critics have charged that the donations would expand the company's reach into the education market, a market it has traditionally not been strong in, while Apple has traditionally dominated that area.

In place of the proposed settlement, Apple urged the court to adopt a plan by which Microsoft would donate $1 billion in cash to a private foundation which would then distribute the funds to needy schools to use on technology of the school's choice.

Apple opposes the settlement as it would "constitute a massive subsidy for the adoption of Microsoft technology, not only in the eligible schools, but throughout school districts and states," the company's filing reads. Apple goes on to say that "the settlement will extend Microsoft's monopoly and thereby distort purchasing decisions and channel resources away from products that would better serve students."

Microsoft's operating system monopoly would only be strengthened by the proposed settlement, Apple said, because after the donation of Microsoft products and services it would be too expensive for schools to switch to other platforms or applications. This would ensure future sales or Microsoft products and services, the filing said.

Besides ensuring future Microsoft sales, the settlement would also likely hurt already disadvantaged schools and students by saddling them with outdated technology, Apple said.

"In particular, the settlement's emphasis on used, refurbished computers will serve to keep the newest technologies -- such as high-speed and wireless technologies -- out of the disadvantaged schools that may need these technologies the most," the filing read.

Apple also charged that the settlement would have a ripple effect throughout school districts and states that received parts of the settlement. As school districts and states often prefer to standardize on one computer platform or application, the donations would result in the pressure to adopt Microsoft products across entire districts or states, rather than limiting them to individual schools, Apple said.

"Schools receiving grants should be entitled to select the products and services they need from vendors competing freely without the impact of a massive subsidy for the adoption of Microsoft technology," Apple said in its filing to the U.S. District Court for the District of Maryland, which is the jurisdiction for the private lawsuits.

"Such a structure would ensure the freedom of choice necessary to meet the schools' needs, while preventing Microsoft from completely dominating what has been a competitive education market segment," the company said.

The proposed settlement, first announced in late November, would have Microsoft donate the software, computer equipment and other related funding to schools as compensation for the company's alleged overcharging of consumers for its software. The deal immediately came under scrutiny, however, with critics, including Apple's co-founder and Chief Executive Officer Steve Jobs, charging that the settlement would be a gift to Microsoft rather than changing the company's behavior. Critics also said that such a deal would help further the monopoly position a federal judge ruled the company already enjoys.

Microsoft's proposed penalty, Jobs said Thursday in a statement, only appears to be worth more than $1 billion, but would actually cost the company less than $1 million. Jobs first proposed the $1 billion cash grant settlement on Thursday.

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