California Consumers Settle MS Antitrust Suit

lseltzer writes "According to AP, $1.1B in Microsoft products will go to California consumers to settle antitrust claims against the company. I bet the lawyers don't get paid in software." Actually, the article says that those who apply for some of the settlement will receive "vouchers redeemable for any manufacturer's computer-related products and software."

Comments

Yet another....

[sheepab]

Slap on the wrist to Microsoft, really, the only hope we have of Microsoft being truely persecuted lies in the hands of the European courts.

What they should do...

[speedfreak_5]

Is have microsoft come in and tune-up the state's computers, install some linux, *nix, etc servers where necessary or applicable, hook them up with some free W3C-compliant (no MS specific html) government websites instead of giving out vouchers to keep people hooked on their overpriced crap.

Re:What they should do...

[pershino]

I wouldn't trust M$'s engineers to install a lightbulb never mind Linux - they should be ordered to pay for an army of Linux engineers to install Linux on the state computers.

MS always come up with SLAP in your face solution

[oktokie]

I am not sure if the Windows ME and Windows NT which came with my desktop and server is refundable...
I am pretty sure that most of their money is made on their crappy OS which I was forced to pay when I purchased my hardware to run BeOS and Linux...

They have so much money so, $1.1 Billion dollar penalty is a drop in the bucket. Let say that parking ticket in the town was $30 per violation.
If illegal parking brings $110 profit because there were no other competitors which knows town officials well enough..and had money to pay off violation.. they still make $80 profit... as long as they make profit...they will ignore the rules and regulations which normal businesses are bound to...

This is really sad...

Well... now we have a tax cut for riches to worry about.

give the vouchers to the state

[Petrox]

Microsoft had initially hoped to donate this amount in-kind to schools, right? In other words, Microsoft had wanted to donate this amount in software and other Microsoft products. Ostensibly, the schools were to receive the benefit. The problem from the perspective on many individuals and competitors (such as Apple) was that this would allow Microsoft to extend its monopoly into a market it didn't already have a monopoly in.

Today, we have this settlement, which allows consumers to claim a voucher. We also have a request by California Gov. Davis to cut funding to social services and education, as well as to increase state income taxes. Consumers should be allowed to settle their increased tax bill by handing over their settlement voucher to the California government, in exchange for a guarantee that the voucher would be used to purchase computer technology equipment and other educational resources for state schools. Perhaps also the California government should be awarded any unclaimed consumer vouchers after a certain (short) settlement period. This way, schools would be able to purchase whatever resources best fit their needs (instead of having free Microsoft products handed to them), and some of the sting of the increased taxes could be reduced.

Just a thought...

I'm not an accountant

[joeflies]

but is the reason for doing these deals is that it gives Microsoft a tax break? Can't microsoft write off product/licenses given away (as compared to withdrawing the equivalent cash out of the revenue stream)?

I'm just trying to get a grasp on what the real financial impact is here (and whether if it is really a penalty)

Re:I'm not an accountant

[jsse]

Definintely. Microsoft could find a way to write it off as a tax donation, and they could actually cash in profit in the long run in future licensing/upgrading deals.

However, this is not the worst part of this settlement. Apple's big stake in the educational market could be jeopardized by Microsoft pouring in millions of dollars of free software.. The sounds crazy, the settlement is doing exactly the thing that Micosoft was being sued for.

Where is justice?

Re:actually

[Anonymous Coward]

In .au this would be illegal. Show us the cash
Since the 1800's paying workers in product/goods is illegal.
It is like prostitutes paying their police fines with 'services'.
Mucking around with PV and INTEREST, it sounds like a trick the British in Boston would do, except this time round California is royaly duped.

Just curious here ...

[SuperDuG]

If Microsoft were ordered by the court to give $12 Billion dollars to Netscape, Linux (good luck), OS/2, BeOS, or whomever else they stomped on, would that be acceptable?

How about if the entire microsoft headquarters was set ablaze and all the states attorney generals got to roast marshmallows on the remains? Of course not we all would think that was "unfair".

BUT MS having to give 1.2 billion dollars to the people of California, that's just not good enough.

So here's the question for all of you who think that this "isn't enough". What is enough? I'm meerly trying to spark discussion here, not put anyone down. I would really like to know what people think should be the punishment of microsoft.

Weigh in the amount of damage they've done, business lost and lives lost. Information stifled to just being at the right place at the right time. Explotation of the weak, or creating a market where there was none. I really want to know what the slashdot community thinks.

Re:Just curious here ...

[jimhill]

Well, I'd reject this agreement if I were the judge who had to approval responsibility. Before explaining why, let me kick out some facts/numbers/minor assumptions.

0) Microsoft admits no wrongdoing in the settlement.

1) Microsoft isn't paying a $1.1B fine. It is issuing vouchers for _up to_ $1.1B in products, whether hardware or software, whether Microsoft's or someone else's.

2) The redemption rate on vouchers and coupons and rebates is historically very low. Everyone knows this; it's why manufacturers will include $50 rebate coupons in their products rather than just knocking $50 off the price. The lower the rebate, the lower the redemption rate. With the vouchers in this settlement being $29 for Excel or Office, $16 for Windows, and $5 for Word, an awful lot of people won't bother, especially since they won't be getting a check, they'll be getting a discount which means "you gotta spend money to save money" at a time when the economy's tight. Let's say Microsoft ends up issuing half a billion dollars' worth of these vouchers (which I think is way optimistic). There are two immediate consequences of that.

3a) Of the $500M issued to private claimants, 80% or so will go to businesses (assuming equal breakdown of claims to sales; the SJMerc reports businesses were responsible for 80% of MS sales in California). Whether through preferring to go with the 'standard' or through an honest belief that One Microsoft Way is more than an address, these businesses have made the decision to use Microsoft software and the hardware than runs it -- including some sold by Microsoft. It is reasonable to expect these businesses to redeem their vouchers on More Of The Same. They'll be using these vouchers to expand the use of Microsoft products. So long as they choose software, the cost to Microsoft falls effectively to zero. The same applies to the $100M issued to private citizens, although their claim rate is likely to be higher because of disgruntled Microsoft-haters who make sure to buy a Logitech mouse with the voucher from their Windows tax.

3a) The remaining fraction, $600M, is one-third kept by Microsoft (saving $200M off the top) and two-thirds (that's $400M, if you're bad at math) donated as vouchers to schools. They will likely do with those vouchers what private claimants do; namely, turn them into more Microsoft products. Again, much of that will be software, making Microsoft's effective price zero.

That means that of the Whopping, Staggering One Point One Billion Dollar Agreement, Microsoft will probably lose one-two hundred million in income due to the cash value of the vouchers. A company that size can afford that without a hitch, esp. since the income spike caused by voucher redemption (using your $16 coupon to buy a $200 XBox means another $184 for Microsoft plus future licensing fees on the games you'll buy) and the tax benefits of having to absorb a "$900M" court settlement will offset voucher value so it will almost certainly end up seeing a pretty sweet bump to its bottom line, plus the warm fuzzies many people will feel when they see Microsoft write a "$400M check" to those poor public schools.

In short, the agreement is going to help Microsoft immensely. It is going to do _very_ well if the court accepts the agreement.

So here's why I'd reject it: the purpose of the suit was to prove that Microsoft used its monopoly power to overcharge California customers. The purpose of a settlement or penalty is twofold: to make restitution to the overcharged and to dissuade the company from doing it again. I think the settlement would accomplish the first but it fails utterly in the second. The company walks away with increased revenue, improved PR, and no legal record of having broken the law. That is unacceptable to me. See you in court, Counselor.

You asked what _would_ be acceptable. Microsoft pays real money, not vouchers. It pays all the money to the state of California, to ensure that the company's penalty is real and not diminished by the large number of citizens who aren't worked up enough to claim their refunds. California can distribute the funds to claimants and distribute the rest to schools in whatever equitable manner the legislature decides (which would probably means giving $X to the schools, cutting the school budget allocation by $X, and increasing general fund spending by $X -- that's what the states with lotteries to benefit education do). Microsoft pays treble the estimated overcharge (let's call it $3.3B in the manner of the original settlement proposal). Microsoft admits willfully using its monopoly power to overcharge California customers. Microsoft pays all the undoubtedly soaring legal fees associated with the case. Microsoft pays California the cost of administering the refund program. The legal and administrative costs are in addition to the $3.3B penalty, not part of it. That, I could live with.

uhhhhmmmmmm.......

[hswerdfe]

So To Punish them for using there monopoly.

they are going to force an expansion of there monopoly.

good work guys

Re: Software cost

[martin-boundary]

Actually, what would be funny too is if Red Hat did a quick advertizing blitz offering free boxed copies of Red Hat to anyone willing to prove that they bought some hardware with their refund voucher. They could even offer to preinstall the software on selected hardware sellers products. Just an idea.

Re:cool

[Anonymous Coward]

I'm sure Red Hat and other distributions will appreciate if you buy enough copies of their distributions to fully stock the local schools...

What about GNU donations?

[egil]

Wouldn't it be appropriate to use as many as possible of these vouchers for a purchase from FSF? Perhaps the FSF could make some sort of micro-edition of Gnu software to be bought for download (i.e. minimal cost for FSF)?

Re:Software cost

[Anonymous Coward]

Think X-Boxes.

Use vouchers to buy something which they lose money on?
But they'll make money from you buying games.
Buy X-Box with cash, use vouchers for X-Box games.
(That's X-Box as in "The Unknown minus its box")

What is enough

[Conspire]

1. Break up company into separate companies (OS, Office, Internet). Separate companies have non conflict of interest and independant boards and management.

2. Disgourge majority of company profits realized over the monopoly period. Disgourged profits used to fund public education (not computer specific education, but math and science education via books and teachers)

3. Open all MS undocumented APIs (both recent and historic), and open all MS file formats. Let the spin off companies keep thier *coughccough* great source code.

4. Rule that all MS spin off companies can not finance any political campaigns or lobby groups. In fact, let's just eliminate soft money in the US altogether from any company!

Those four are starter points of what I think "is enough" for the bit bully of our day.

Re:Replying to myself...

[t0qer]

Two-thirds of any unclaimed settlements, up to $1.1 billion, will be given to California's neediest public schools

Awesome news because that daywalking vampire .gov Gray Davis has just announced we're in a 85 billion dollar deficit. Schools are getting shut down this year as a part of budget cuts.

WTF happened to all that taxes you took when I had a .com salary you cocksucker davis? You 'aint foolin me. Prolly spent it on hookers and booze you twit.

Anyways, considering 1.1 billion is a hefty percentage of the 85 billion dollar deficit across the board, whatever schools are left will not have to worry about their computer systems. Hopefully the Department of Education will take this as an oppertunity to covert everything over to the internet and give free dialup access to students. On top of that covert all schoolbooks to HTML. I don't think thats impossible with 1.1 billion going towards equipment.

Part of the curriculum should teach kids how to turn that pentium 166 into an internet appliance for schoolwork. Plenty of them are ending up in landfills out here in CA. No joke. Linux is still too shitty for a desktop, so maybe adopt openBeOS as the schools primary platform.

Of course, it'll never happen. More than likely the education board will line their own paychecks before investing it into a working technological breakthrough in education.

It's cool to dream though.

Maximum Damage

[diakka]

I think it should be the duty of everyone in California to use this opportunity to inflict the maximum financial damage against Microsoft. Maybe we need more details of the settlement to determine how this will be done. I have a few thoughts on it so far.

1. We MUST not let any of these funds go unclaimed. Don't forget to file your claim. Tell all your friends. Tell your friends to tell their friends.

2. Don't treat this voucher as a freebee. Only use it to purchase software that you would have purchased had you not received a voucher in the first place.

3. If you absolutely must purchase a Microsoft product, be sure and use it for something like an Xbox or something that has a high per unit production cost, not software licenses.

4. Use it to purchase software from direct Microsoft competitors.

5. If they are allowed to redeem it for cash, donate your voucher to an organization that creates free software, such as the FSF.

I hope others of you out there will have some suggestions as well.

Re:Software cost

[gilesjuk]

Indeed, it's like when they seize drugs, they always quote the street value. Such drugs cost nothing to produce, the smugglers rely on the limited supply to keep prices high.

Were Microsoft to supply them with $1.1B in cash it would hurt a lot more. Most of these cases were about overpricing, it's odd that they have settled for vouchers for their overpriced software.

MS Mice are themselves counterfeit

[DrSkwid]

I was trying to find stories about counterfeit mice but I could only find stuff about that here and here

but
This story is much better

A Seattle jury called it misappropriation of trade secrets and last month [Dec 2001] awarded a $16.5 million in damages to Fernando Falcon and Federico Gilligan.

The Argentine inventors Falcon and Gilligan invented a computer mouse that allowed concurrent pointing and scrolling. They showed their work in 1993 to KeyTronicEMS, a computer electronics manufacturer in Spokane, Wash., and helped the company build two prototypes. Together they planned to take the mouse to market.

At the time, KeyTronic was struggling to overcome an $8 million loss and hoping to land a lucrative contract making keyboards for Microsoft Corp.

KeyTronic's then-director of research and development, Charles Fauble, assured Falcon and Gilligan that he would show the mice to Microsoft developers at a December 1993 business meeting. That was the last time anyone remembers seeing the devices.

KeyTronic couldn't explain in court how it lost the devices, and Microsoft couldn't explain how the inventors' technology wound up in its Intellimouse, which hit store shelves in 1996.

Here's what was clear: KeyTronic scored a $160 million keyboard contract from Microsoft, and Microsoft raked in roughly $650 million from one of the best selling mouse products of all time.

Vickrey said there was no evidence that Microsoft knew it was getting Falcon and Gilligan's confidential technology.

Anti-trust and Xbox digital signing keys

[Anonymous Coward]

The classic example of Anti-Trust is Kodak creating a new type of battery for it's cameras. If Kodak can't show that there is any advantage to the consumer and that the only purpose to creating an camera incompatible with existing accepted battery standards is to limit consumer choice then they are in violation of Anti-Trust laws for forcing the sale of Kodak batteries as part of buying Kodak cameras.

Xbox software key signing is part of the anti-piracy system. For a large part, that means that key signing is for the benefit of MicroSoft and possibly other game publishers, not the customers that purchase the console. MicroSoft may be able to show that other game publishers would be unwilling to produce games for the Xbox if the key signing anti-piracy system was not in place. However, history has shown that even when game publishers are aware of methods of piracy for game consoles they continue to publish games for that console anyways. Also, it has been shown that the key signing part of the anti-piracy system has not been effective in stopping the creation of mod-chips for the Xbox. So, it is even debate-able how effective a benefit key signing is to other publishers of Xbox content. Hence, the only thing that key signing has been effective against is artifically forcing software, a "'plug-in' component that 'powers' what the Xbox does," to be only available if it has been signed by a single source (MicroSoft). In several ways, I think the Xbox signed software mirrors the Anti-trust issues created by Kodak creating a camera that requires a special type of battery.

Californa courts have shown themselves willing to enforce anti-trust law, even against the US big giant. Rather than working on silly attempts to "crack" the 2048 bit key, why not get some lawyers to "ask" for the private key. Can MS prove that there is a benefit (directly or indirectly) to the consumer that every piece of software that loads on the Xbox is signed by MS?

hurting microsoft

[edstromp]

I have been recently reading The Silent Takeover: Global Capitalism and the Death of Democracy by Noreena Hertz, and she has an excellent idea about issues like this, and I think what we really need to do about this Microsoft issue is really quite straight forward.

Governments and politicians have proven to be quite ineffective (what did the "Monopoly" status get us?), so we need to react as consumers, and we need to STOP BUYING MICROSOFT PRODUCTS!.

Microsoft has said that their bread and butter is Windows and Office, so above all else, those two products should be avoided. ... now I understand that they are difficult ones to avoid, but lets face it... the government can't do anything, so what are you going to do?

What about OEM software?

[phr2]

I haven't bought any Microsoft shrink-wrapped products but have bought several new computers with Windows preinstalled. I never tried returning the stuff, Windows Refund Day notwithstanding. Can I get some vouchers?

What about this?

[wganz]

I was in California and bought Microsoft Office when I was there. Since this purchase was made in California, could I get part of this even though I reside in Texas? Was I a 'California' consumer at the time of purchase?

Re:actually

[caferace]

Makes one wonder if a pr0n DVD (that is playable on a computer) would be considered fair game. :)

Some years ago, I attended the Windows Refund Day in Foster City, Ca. and all I got was a VA Software T-Shirt, and not a lick of cash from MS. I may actually end up (in the end) getting something out of that action.