Microsoft Settles with State of California

Microsoft announced late Friday that the company had reached a settlement in the largest class-action lawsuit to arise since the guilty verdict in Microsoft's federal antitrust case. The case was originally scheduled to go to trial next month. According to the settlement's terms, Microsoft will pay 13 million California plaintiffs more than $1.1 billion in vouchers they can use toward any future computer hardware or software purchases.

"This is a good resolution for all sides, and we're especially pleased by the opportunity to help thousands of schools all across California get the computers and software they need," said Microsoft General Counsel Brad Smith. "This settlement allows us to focus on the future and building great software, and avoids the cost and uncertainty of a lengthy trial." Lawyers representing the California plaintiffs apparently agreed. "This settlement represents a significant portion of the amount that Californians paid to Microsoft for its [OS] and key applications software over a 7-year period," said Lead Counsel Richard Grossman. "It is a tremendous result for California's businesses and consumers and will also benefit our schools at a time when that help is desperately needed."

Consumers, schools, or businesses that purchased any Microsoft software between February 1995 and December 2001 are eligible to file claims in the case and have 4 years to use the vouchers, the value of which will be determined on a case-by-case basis, depending on the cost of the Microsoft software purchased. Businesses and other organizations that bought Microsoft software in quantity are expected to reap the largest benefits. Microsoft will let California customers search the company's software registration database to determine the value of the Microsoft products they purchased.

Although Microsoft faces other class-action lawsuits, the California case is unique. First, the case involves Microsoft products other than Windows and Microsoft Internet Explorer (IE), which were the subject of the federal antitrust case. The case also involves the largest number of potential plaintiffs, and California has the most favorable consumer-protection laws.