A proposed settlement of private antitrust suits against Microsoft Corp caused a US federal judge some concern on Tuesday when an economist testified he had greatly underestimated the possible consumer overcharges that could be recovered from the company.
Microsoft and most of the class action attorneys in the case are in favor of a deal that would require the company to spend more than US$1 billion to put software and computers into some of the poorest US schools.
But some lawyers in the case say the deal is a fraction of what Microsoft owes for abusing its monopoly over personal computer operating systems and overcharging millions of people for software.
Keith Leffler, an economics professor at the University of Washington testifying on behalf of plaintiffs lawyers wishing to settle, said that the US$2.1 billion amount he had mentioned previously should have been US$5.15 billion.
US District Judge Frederick Motz called the earlier estimate a "dramatically incorrect figure" that raised doubts about the settlement deal.
"It seems to me you've got to go back to square one to get back to square five," Motz said.
But Motz then appeared to accept the explanation of attorneys in favor of settlement who said the incorrect figure had not been used during settlement negotiations.
The preliminary hearing on the settlement will continue on Dec. 10 when Microsoft is due to make its presentation in favor of the settlement.
Outside the court, Microsoft deputy general counsel Tom Burt said the incorrect damages figure was "never discussed at all during negotiations."
Burt said the class-action attorneys instead cited much larger figures because "plaintiffs always write a huge number on the blackboard."
Under terms of the settlement announced last week, Microsoft would assist more than 12,500 schools serving nearly 7 million children.
Critics say the deal would just entrench the monopoly of Microsoft's Windows operating system and make further inroads into the school market once dominated by rival Apple Computer Inc.
An attorney for Apple opposed the settlement, telling Motz the school market was an important one.
But one of the lead settlement attorneys, Stanley Chesley, denied allegations that the settlement was a "marketing scheme" for Microsoft.
Chesley told Judge Motz the deal would help close the so-called "digital divide" which he said "dooms millions of American youths to low-paid insecure jobs at the margin of our economy."
In contrast to this optimistic scenario, an economist working for attorneys in California who have spurned the deal, said the settlement would be unworkable and force additional costs on schools for running and maintaining the computers.
Jeffrey Mackie-Mason, an economics professor from the University of Michigan, said the deal was less valuable than the settling attorneys contended and more money could be recovered from Microsoft.
He also criticized settlement negotiations for taking place in the absence of accurate figures.
"Why are they trying to settle a case without figuring out what it's worth?" he asked.
Microsoft agreed earlier this month to settle its separate three-year-old antitrust case with the Justice Department and nine of the 18 states that had backed the suit.
On Tuesday, Connecticut said it had definitely decided against signing that settlement which aims to give computer makers freedom to feature other software and requires Microsoft to share parts of the inner workings of Windows with other software makers.
Connecticut Attorney General Richard Blumenthal said the settlement in its current form, that still must be approved by a judge, had too many gaps and ambiguities.
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