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California Consumers Settle MS Antitrust Suit

Posted by timothy on from the but-the-customers-shrug-and-move-on dept.

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."

36 of 274 comments (clear)

  1. actually by Anonymous Coward · · Score: 5, Informative

    "proceeds of the settlement will be distributed to members of the class in the form of vouchers redeemable for ANY manufacturer's computer-related products and software."

    notice the word 'any'

    1. Re:actually by Anonymous Coward · · Score: 4, Interesting

      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.

  2. Wow by houseofmore · · Score: 5, Funny

    $1.1B in Microsoft products

    What's that... a few hundred boxes of MS Office?

    1. Re:Wow by ender81b · · Score: 4, Funny

      Fun with math!

      MS Office XP Professional - $536

      1,100,000,000/536 = 205,228 copies of MS Office XP Professional. With 34,501,130 people in the state that comes to one copy for every .005 people, unless I screwed up my math which is entirely possible.

      Of course this little exercise in math shows you just how profitable the Office XP business is for microsoft. They sell a quarter million copies of software and make a billion dollars. You don't really think that it cost MS anywhere close to 1 billion dollars to support/code Office XP do you? Now take the fact that MS sells around 1 million copies a year (granted some are cheaper due to OEM, Enterprise Agreements, Education Discounts, etc) and you see why MS is so paranoid about losing its lead in the office line.

  3. Consumers rejoice! by Anonymous Coward · · Score: 5, Funny

    "And in other news, the ACME toxic waste company has agreed to settle its lawsuits by giving out $1.1Billion in ACME brand toxic sludge, or vouchers good for any other brand of toxic waste.

    1. Re:Consumers rejoice! by Jeremiah+Cornelius · · Score: 4, Funny

      And in other news: convicted serial rapist, Joe Bloggs has been required by the courts to show restitution by showering his sweet, affectionate attentions on former victims.

      --
      "Flyin' in just a sweet place,
      Never been known to fail..."
  4. MS always come up with SLAP in your face solution by oktokie · · Score: 5, Interesting

    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.

  5. give the vouchers to the state by Petrox · · Score: 5, Interesting
    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...

    --
    sig my booty, check my website
  6. I'm not an accountant by joeflies · · Score: 5, Interesting
    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)

    1. Re:I'm not an accountant by jsse · · Score: 5, Interesting

      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?

  7. Intangible goods by nukey56 · · Score: 4, Funny

    Someone please explain this to me: why is it that the states can accept this settlement, which costs Microsoft NOTHING (aside from lost sales, yadda yadda), and actually bolsters their position by spreading their law-breaking product around, but they won't allow tobacco companies to do the same and distribute a quarter billion packs around the table? I mean, which is a bigger cancer stick, seriously?

  8. Re:Software cost by farnsworth · · Score: 5, Funny
    it doesn't seem to be just MS software:

    proceeds of the settlement will be distributed to members of the class in the form of vouchers redeemable for any manufacturer's computer-related products and software.

    maybe the state of California can now afford that Oracle contract it signed... *ducks*

    --

    There aint no pancake so thin it doesn't have two sides.

  9. When will people learn? by intermodal · · Score: 5, Insightful

    Law's don't change when you settle a suit. You just get money. Now, if you were to actually go through with it...the potential damage in law would do exponentially more damage to Microsoft than a drop-in-the-bucket lump sum of cash value.

    --
    In SOVIET RUSSIA... erm...NSA AMERICA, the Internet logs onto YOU!
  10. Re:Software cost by nomadic · · Score: 5, Insightful

    They're losing virtually nothing in this and it is a complete failure of the political system to prosecute them.

    Why are you assuming anyone who took advantage of this would choose software?

    Think X-Boxes. Think mice, keyboards, and joysticks.

  11. How ineffective by absurdhero · · Score: 4, Insightful

    This is almost as silly as forcing drug lords to give away vouchers for free drugs. Not quite that bad, but similar effect.

  12. Re:What they should do... by Anonymous Coward · · Score: 4, Insightful
    Wow. You guys must really live in alternate plane of reality.

    ... I'm truly speechless at how unsatisfiable you will ever be.

    First you'll say Pay! Then it's no no... not pay, install linux. Then it's no no, I wouldn't trust you to install linux.

    I WANT BILL TO COME AND CLEAN MY TOILET BOWL.

    It's sad to see that you are completely on a viceral level of 'reasoning'. I pray to god you never get in some power situation... cause, hell, Bill maybe be 'evil', but he's cold and calculated.

    You would probably have burned people in auto-da-fés if you roamed around during the inquisition...

  13. Hmm...... by starphish · · Score: 5, Funny

    California: "Microsoft, we are going to sue you because you use unfair business practices by giving away your product to destroy your competition!"

    Microsoft: "As a punishment, you should make us give away our products. That will teach us!"

    California: "Sounds good to me!"

    DOH!!!

    --
    Yeah, yeah, yeah. The story is a dupe, the topic is boring, the facts weren't checked. WE GET IT!!
  14. Note the word ANY by muon1183 · · Score: 5, Insightful

    As some have already noted, the actual wording is that the vouchers are good for ANY computer product. I propose that people use these vouchers to fund your favorite linux distribution or open source group. Let's use Microsoft's money to fund their competetion.

    --

    There's no sig like SIGSEG
  15. Just curious here ... by SuperDuG · · Score: 4, Interesting
    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.

    --
    Ignore the "p2p is theft" trolls, they're just uninformed
    1. Re:Just curious here ... by Spy+Hunter · · Score: 5, Insightful
      What is enough?

      The only requirement for a solution to be "enough", IMHO, is that it prevents Microsoft from continuing to practice anti-competitive monopolistic behavior. As we have seen, they won't stop on their own. The fact that they exist pretty much makes it inevitable that they will behave in an anti-competitive manner. The only real solution to the problem that I see is a split, but that has problems of its own.

      This settlement is a joke. 1/40th of Microsoft's cash reserves? It may be a lot of money, but they've got money out the wazoo. The lawyers get rich, the consumer gets a $20 voucher, whoopee. Not to mention that most of the voucher money will probably go unclaimed, and the claimed part will largely be spent in a manner that only strengthens Windows's hold on the market (Office, Windows software, Windows itself, Windows PCs, Windows-specific hardware). And there is no mechanism to ensure they won't turn around and do the same anti-competitive things tomorrow. The settlement is the equivelant of a verbal warning. "Bad Microsoft! Don't do that again!"

      --
      main(c,r){for(r=32;r;) printf(++c>31?c=!r--,"\n":c<r?" ":~c&r?" `":" #");}
    2. Re:Just curious here ... by jimhill · · Score: 4, Interesting

      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.

      --
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  16. Re:Software cost by Jordy · · Score: 5, Insightful

    It doesn't quite work that way.

    It is true that the cost to develop, package, ship, advertise, and support a product is signifcantly less than the retail price of the product itself.

    However, you must realize that if you get something that you were going to buy without having to pay for it, they have lost revenue. It doesn't matter if they put 90% margins on their software. They have lost the money they would have made and used to subsidize other projects. Since really only the Windows and Office groups are even profitable, that does indeed affect their bottom line.

    Now, it won't hurt like outlaying actual currency, but it will still hurt quite a bit.

    --
    The world is neither black nor white nor good nor evil, only many shades of CowboyNeal.
  17. qualifying for a claim by dmeranda · · Score: 4, Insightful

    How does one actually qualify to make a claim for a voucher, especially if you double or triple purchased a Microsoft license. Most companies have a hard time just knowing what their current licensed products are, not to mention knowing how much they are eligible to claim going back to 1995. I can just imagine the helpline: "okay let the BSA do an audit and they'll tell you what we owe you (er, you owe us!)".

    And did anybody else catch that of the unclaimed refunds schools get 1/3, and of that amount half will be for vouchers of MS products only.

  18. Re: Software cost by martin-boundary · · Score: 5, Interesting

    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.

  19. Re:Software cost by Spy+Hunter · · Score: 5, Informative
    You have to look for a report on this by a California newspaper. It will have much more detail about the exact terms, since CA residents are the ones who are getting the vouchers. From the San Jose Mercury News:

    Under the terms announced today, Microsoft will issue vouchers, ranging in value from $5 to $29 per licensed product, to consumers and businesses. The vouchers can be used to buy computers and software from any maker, including Microsoft rivals.

    For claims totaling $100 or less, no documentation of purchases is needed, they said.

    Plaintiffs' lawyers estimate consumers will recoup about one-third of what they spent for Microsoft products, including the Windows operating systems and popular Office and Word programs, between Feb. 18, 1995, and Dec. 15, 2001.

    For example, consumers will receive a voucher for $29 for each copy of Microsoft Office purchased, $26 for each copy of Excel, $16 for each copy of the Windows operating system and $5 for each copy of the word-processing program Word, according to plaintiffs' lawyers.

    --
    main(c,r){for(r=32;r;) printf(++c>31?c=!r--,"\n":c<r?" ":~c&r?" `":" #");}
  20. If you think this is bad... by tlambert · · Score: 5, Funny

    If you think this is bad... ...Their first offer was to port the "dancing paperclip" to FreeBSD, Linux, and Solaris.

    -- Terry

  21. Replying to myself... by Spy+Hunter · · Score: 5, Informative
    Oops, almost forgot:
    Two-thirds of any unclaimed settlements, up to $1.1 billion, will be given to California's neediest public schools to be used for computer equipment and related services in a program to be administered by the state's Department of Education. Microsoft would keep the final one-third of the unclaimed portion.

    And a link to the article

    --
    main(c,r){for(r=32;r;) printf(++c>31?c=!r--,"\n":c<r?" ":~c&r?" `":" #");}
  22. What about GNU donations? by egil · · Score: 5, Interesting

    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)?

  23. Hmmm, let's see by m00nun1t · · Score: 5, Funny
    I'm entitled to my voucher for $25 which I can use to get any software. How many copies of linux can I buy... let's see...

    $25/$0 =


    Divide by zero error. Post terminated.

    --
    Read reviews of shopping cart software
  24. What is enough by Conspire · · Score: 4, Interesting

    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.

    --
    Real men don't need signitures!!!
  25. Re:Software cost by Corporate+Troll · · Score: 4, Insightful

    Ehm... Do neither... Your logic is flawed: it's the total sum that you pays them that counts. Net total you still pay them. It's better to leave the Xboxes and the games on the shelves. Get your gaming kicks at Sony or Nintendo. And if you think those companies are evil, buy yourself a used Sega Master system.

  26. Re:Software cost by gilesjuk · · Score: 4, Interesting

    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.

  27. Re:Software cost by AntiNorm · · Score: 5, Insightful

    Plaintiffs' lawyers estimate consumers will recoup about one-third of what they spent for Microsoft products, including the Windows operating systems and popular Office and Word programs, between Feb. 18, 1995, and Dec. 15, 2001.

    For example, consumers will receive a voucher for $29 for each copy of Microsoft Office purchased, $26 for each copy of Excel, $16 for each copy of the Windows operating system and $5 for each copy of the word-processing program Word, according to plaintiffs' lawyers

    Since when have they been selling Windows for $48?

    --

    I pledge allegiance to the flag...
    of the Corporate States of America...
  28. Wait, the fix for monopoly is... more monopoly? by RyanFenton · · Score: 5, Insightful


    So, Microsoft is found to have unfairly leveraged their monopoly, so the request is: "Um, hey, can we have some more of that software 'ya got there? It's just the best darn thing we could thing we could use."

    Just imagine if this form of punishment were applied to other organizations acting in a criminal manner:

    A mob being asked to offer it's "protection services" at no cost for one year.

    Politicians found to have taken bribes being asked to serve without their official pay for the remainder of their term.

    A drug cartel being asked to provide half it's crop to the state for free the next year.

    A corporate polluter punished by being forced to create more product next year. ...I really don't hate Microsoft, but once again, feel our nation's justice system has fallen into insanity with it's treatment of that company.

    Ryan Fenton

  29. peanuts -- evil peanuts by g4dget · · Score: 4, Informative
    I recommend reading the news.com article. Major points:

    • It's for Windows 95 and Windows 98.
    • It seems to be focused on business licensees.
    • It's unclear whether the vouchers are really unrestricted; the formulation "Microsoft or other products" sounds like marketing speak for "selected products by Microsoft and a few other companies".
    • It appears that for anything that isn't redeemed, Microsoft gets to keep 1/3, give 1/3 in cash, and give 1/3 in Microsoft software to schools.

    The kicker is, however, $1bn is about as much as Toshiba had to pay for shipping supposedly defective floppy disk drives on their laptops.

    I think this is absolutely evil. Even if Microsoft had to pay everything in cash, it would be peanuts. Instead, they'll be able to further contaminate schools with their proprietary software, something they have already volunteered to do as a "donation"--a tax sheltered marketing ploy.

  30. perhaps not by g4dget · · Score: 4, Insightful
    NPR just reported this as "vouchers that are redeemable for software and hardware [...] even some products not made by Microsoft". The other reporting, say on News.COM, also suggests that the vouchers will only be redeemable for selected products. And why give "vouchers" if they could be redeemed for anything? Why not just give cash?

    It's common in these kinds of settlements for manufacturers to give vouchers for their own products. This is likely no different: you can probably use the vouchers to buy Microsoft software and hardware running Microsoft software. Non-redeemed vouchers will be given as 1/3 in Microsoft software and 1/3 in hardware (presumably, PCs running Microsoft software) to schools.

    Even $1.1 billion in cash would be a slap on the wrist. This "settlement" is an insult: it's a marketing promotion for Microsoft and a means by which they can get more of their software into the education market.