Judge rejects Microsoft deal

Microsoft's Bill Gates wanted to donate computers to schools

A US federal judge has ruled against Microsoft, refusing to endorse a settlement that many saw as a threat to its rival Apple Computer.

US District Court Judge Frederick Motz refused to endorse a plan that would have required the software giant to provide Microsoft software and computers with a market value of hundreds of millions of dollars for poor schools.

Apple Computer opposed the deal, saying it would allow Microsoft to dominate the educational software and hardware market.

Apple wanted Microsoft to make a cash donation to schools, allowing them to choose for themselves the types of programs and computers they wanted.

The plan was offered up as a proposed settlement to the more than 100 class-action suits seeking damages in excess of $1bn (£700m).

Back to the drawing board

The class-action suit is separate from the federal government's anti-trust case. However, the class-action moved closer to settlement on 20 November, nearly in tandem with the anti-trust case.

The refusal by Judge Motz to approve the settlement means Microsoft attorneys must return to the drawing board in drafting a plan to settle the class-action suit.

In deciding against approval, Judge Motz said he could not be sure that the cure was itself impeding competition.

He also said there was insufficient evidence to show the billion-dollar settlement to provide schools with equipment was adequately funded.

Microsoft spokesman Jim Desler said the company was "disappointed that this unique opportunity to advance very significant social benefits has been blocked".

And Dan Small, one of the lawyers who represented the plaintiffs and was involved in drawing up the deal, said he was also disappointed.

"We worked hard to put together a settlement that we believed would have done a lot of good for poor students in this country."