Proposed Microsoft deal rejected

BALTIMORE - Microsoft Corp. has lost its bid to settle dozens of private antitrust lawsuits by donating $1 billion worth of computers and software to the nation's poorest public schools.

U.S. District Judge J. Frederick Motz ruled Friday that the proposal was unacceptable because it would give the software giant an unfair advantage over rival Apple Computer, a major player in the education market.

``The agreement raises legitimate questions since it appears to provide a means for flooding a part of the kindergarten through high school market in which Microsoft has not traditionally been the strongest player (particularly in relation to Apple) with Microsoft software and refurbished PCs,'' the judge said.

In dozens of private class-action lawsuits, Microsoft is accused of abusing its monopoly power and overcharging people for Windows, Office and other software. The lawsuits are separate from antitrust suits brought by states and the federal government.

In a settlement reached in November in the private suits, Microsoft offered to give software, 200,000 refurbished computers and other resources the company valued at $1 billion to the nation's poorest public schools.

Apple argued that the agreement encouraged schools to acquire more Microsoft products.

Microsoft lawyer David Tulchin said it is too early to know if the parties could negotiate another settlement that would meet Motz's standards.

``We are willing to litigate, and we have done well so far,'' Tulchin said.

Cincinnati lawyer Stan Chesley, a national co-chairman for the plaintiffs, said he was disappointed with Motz's order, but that his clients still hoped to reach an agreement.

``We will work diligently with Microsoft and fix the settlement before we (would) go to litigation,'' he said.

Motz also said the widely divergent estimates of the value of the claims being settled prevented him from granting approval.

Microsoft had argued that it could have as little as $200 million in liability, while some economists for the plaintiffs estimated the company's liability to be more than $18 billion.