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Tuesday, 27 November, 2001, 23:06 GMT
Apple risks fresh Microsoft feud
Steve Jobs, chief executive, Apple
Steve Jobs: "We're baffled"
Steve Jobs, boss at computer maker Apple, has risked reopening a rift with Microsoft by slamming the software giant's plans for settling longstanding legal claims.

Education is one of the few markets left where Microsoft don't have monopoly power

Steve Jobs, Apple
Mr Jobs has warned that the concessions, proposed for ending class-action lawsuits over Microsoft's market dominance, would only end up strengthening the firm's hand.

Microsoft has proposed giving more than $1bn worth of software, refurbished computers and other equipment to US schools to settle more than 100 antitrust suits, brought on behalf of 65 million customers.

The donation, spread over five years, would see more than 12,500 of America's poorest schools receive donations.

Jobs 'baffled'

But Mr Jobs warned that, far from hurting Microsoft, the move would only boost its presence in the education market.

"We're baffled that a settlement imposed against Microsoft for breaking the law should allow, even encourage, them to unfairly make inroads into education," Mr Jobs told a court hearing into whether the settlement should be allowed.

"[Education is] one of the few markets left where they don't have monopoly power."

The criticism threatens to reopen hostilities between Apple and Microsoft dating back more than 10 years, and longstanding claims of illegal technology use.

Market rivals

Apple, founded in 1976, was by the 1980s credited with having developed a superior operating system, a deal with computer giant IBM allowed Microsoft to gain market dominance.

Apple is clearly the company that could be most damaged

Rob Enderle, Giga Information Systems
But, while legal action over Microsoft's alleged copying of Apple's graphical user interface was settled in the early 1990s, Apple was unable to succeed in maintaining market share.

By the time Mr Jobs returned to the firm in 1997, Apple had reported losses of $1bn.

It was ironically a $150m cash injection from Microsoft that helped foster Apple's revival.

The California-based company is now one of only two computer makers still turning a profit despite the downturn.

Apple vulnerable

Apple, for which the education market is particularly important, is viewed as being very vulnerable to a stronger Microsoft presence in the market.

"Apple is clearly the company that could be most damaged," Rob Enderle, an analyst at Giga Information Systems, said.

Members of the US education community, meanwhile, have questioned whether schools would not be better off with a donation in the form of cash rather than Microsoft products.

"States, districts and schools have spent a lot of time over the last five years creating technology plans," said Helen Soule, director of technology for the US state of Mississippi.

"I would much rather that they be able to implement those plans with some sort of Microsoft funding, rather than be given specific things that they don't necessarily need."

Other critics have pointed out that Microsoft will gain huge tax advantages from the donations - and will count software donations at full market value, whereas the cost to the company of making the donations is tiny.

Compromise deal

But Michael Hausfeld, a lawyer pursuing one of the class actions, said Microsoft's offer would help close the digital divide between richer students, who are more likely to have access to computers, and poorer pupils.

"We clearly have a choice," Mr Hausfeld said.

"We can spend several years, and a great deal of money, fighting the private antitrust cases in the courts for a few dollars benefit per claimant, or we can force Microsoft to assist economically challenged children now."

The reports came as Microsoft revealed it was pressing for talks aimed at agreeing an out of court settlement aimed at ending European antitrust action.

The firm was set to face a hearing next month into allegations it had rigged its Windows operating system to the disadvantage of competitors.

"We've asked them (the European Commission) to withdraw the request for a hearing," Microsoft associate general counsel John Frank said, adding that he would "welcome an opportunity to meet to discuss whether there is an amicable way to resolve this".

See also:

20 Nov 01 | Business
Microsoft settles private lawsuits
07 Nov 01 | Business
Q&A: What next for Microsoft?
06 Nov 01 | Business
Microsoft's future in judge's hands
05 Nov 01 | Business
New threat to Microsoft deal
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