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Microsoft and Iowa dream up settlement

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Internet Security Threat Report 2014

Microsoft has settled a lawsuit alleging it exploited its dominant position to overcharge Iowa state consumers $453m in the last 12 years.

In a standard settlement deal, local schools are set to benefit with Microsoft providing funds to low-income institutions for the purchase PCs and software - probably Windows. Litigants in Iowa had claimed $329m in damages.

Details will not be disclosed until April, the date for preliminary court approval.

The seven-year class action was brought in 2000 by an Iowa businessman who claimed Microsoft's status as a monopoly supplier enabled it to over-charge for Window and Office applications between May 18, 1994, and June 20, 2006. It was claimed Microsoft inflated the price of Windows by an average of $42.49 and Word by $10.55.

Class action cases against Microsoft are fairly common, but this particular suit gained wider notoriety than most for two reasons. First, among the 25 million internal Microsoft documents that were submitted, was former Windows chief Jim Allchin's infamous 2004 email containing the immortal concession to the superiority of Apple's desktop product and relative weakness of Windows. "I would buy a Mac today if I was not working at Microsoft," he said.

Next, litigants claimed that Microsoft was in breach of its 2002 anti-trust settlement with the US government, by using 500 un-documented APIs to ensure Microsoft's applications worked better with Windows than applications of rivals.

But that's all behind them now. "The settlement will provide tremendous benefits for many people throughout the state of Iowa," class co-counsel Rick Hagstrom said in an agreed statement with Microsoft. "We are pleased with the results of this litigation and we are pleased that the process worked so well." ®

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