Microsoft settles antitrust lawsuits

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Microsoft Corp. has agreed to settle antitrust lawsuits in North Dakota and four other states, a move that North Dakota participants say will benefit computer users and schools.

Henry Howe, a Grand Forks attorney who is one of the lawsuit's plaintiffs, said the settlement holds an estimated benefit of $9 million for North Dakota consumers. However, the agreement needs a judge's approval, and the figure could change, Howe said.

The proposed settlement offers vouchers to Microsoft customers who bought the company's software or computers equipped with its Windows operating system, starting in May 1994.

"It's not going to be a windfall amount for any computer user, unless you have had many operating systems," Howe said.

Brad Smith, a Microsoft senior vice president and general counsel, said Tuesday during a telephone conference call that the vouchers may be used to buy computers, software and related products from other companies besides Microsoft.

"This includes anybody's software, whether it's software from Microsoft or from anybody else as well," Smith said. "Consumers can use the vouchers to purchase the products they want, for the platform of their choice."

Once the public deadline for claiming vouchers has passed, half of the unused vouchers will be turned over to schools, which may use them to buy computer hardware, software and technical training, Smith said.

Howe and Michael Simonson of Fargo filed the lawsuit in March 2000, arguing that the Redmond, Wash., giant had used its market power to force customers to pay higher prices for Microsoft software and its Windows operating system.

Besides North Dakota, Microsoft signed settlement agreements with Kansas, North Carolina, South Dakota, Tennessee and the District of Columbia.

Windows controls the internal workings of most of the world's computers.

Northeast District Judge Bruce Bohlman certified the lawsuit as a class action, which allowed Howe and Simonson to represent the interests of all North Dakota Microsoft customers. Microsoft challenged Bohlman's decision, but the North Dakota Supreme Court upheld his ruling in January.

On Tuesday, Microsoft announced it had signed settlement agreements with Kansas, North Carolina, North Dakota, South Dakota, Tennessee and the District of Columbia.

Smith said the Kansas and District of Columbia settlements have been granted preliminary court approval. The Kansas settlement is worth about $32 million, while the District of Columbia settlement is valued at $6.2 million, Smith said. He declined to give a comparable North Dakota figure.

Bohlman is holding a Nov. 19 hearing in Grand Forks to review the settlement. Howe said Bohlman has questioned how the settlement amount was calculated, and whether Microsoft may end up keeping much of it. The judge is also curious about how many schools would benefit from unused vouchers, Howe said.

Simonson said he expects North Dakota schools will benefit from the litigation.

"The idea was, we get back something good for the people of North Dakota through this lawsuit," he said. "Collectively, this amounts to a whole lot of money for putting computers in schools. It's a great deal, I think."

Minneapolis attorney Vincent Esades represented Howe and Simonson in the case. Esades was unavailable for comment.

With Tuesday's agreements, Microsoft has settled consumer antitrust lawsuits in 10 states, Smith said. Cases are still pending in five other states, including Minnesota.

In all, more than two dozen states and the federal government have filed antitrust claims against Microsoft in recent years. Last year, the U.S. Justice Department settled its own case, after a federal judge concluded Microsoft had used its monopoly power to smother competition.

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