Microsoft Announces Additional Class Action Settlements, Continues Progress on Resolving Legal Issues

REDMOND, Wash., Oct. 28, 2003 — Microsoft Corp. today announced that it has reached agreements to settle consumer class action antitrust lawsuits pending in six additional states. With these settlements, the company has reached agreements in 10 states, leaving only five states with cases with certified classes pending.

“As we approach the one-year anniversary of the district court final judgment this weekend, we are making significant progress in resolving our pending antitrust issues,” said Brad Smith, senior vice president and general counsel at Microsoft.

The company also noted progress in resolving the following antitrust cases:

  • Class action lawsuits in 17 other states have been dismissed or have had class certification denied. Thirteen of these dismissals are final.

  • Microsoft has resolved two of the four private “competitor cases.” The company has settled with AOL-Time Warner and Be Inc. The cases filed by Sun Microsystems and are still pending.

  • The federal district court in Maryland has either dismissed the claims or denied requests to certify classes of three broad national or international groups — indirect purchasers, foreign purchasers and volume licensees. In addition, the company reached agreement to settle a fourth and much smaller group of remaining direct purchase end users. That settlement has also been preliminarily approved by the federal court. This addresses all the consumer claims under federal law, although appellate review for these claims remains. In addition, other state law claims, most of which duplicate state claims elsewhere, are pending before the federal district court in Maryland.

  • Of the 20 states that originally brought an antitrust suit against the company, only Massachusetts continues to litigate.

  • In the European Union investigation, the company noted it hopes to work constructively with the European Commission toward a positive resolution of the case.

“We have been working hard to put the legal conflicts of the past behind us and to concentrate on the future,” Smith said. “We recognize that we need to focus not only on resolving these lawsuits, but on building more collaborative relationships with the rest of our industry and with people in government.”

State Class Action Announcements

The company announced that agreements were reached and preliminary approval granted by courts in cases in Kansas and the District of Columbia. Like the other settlements the company has reached, these offer great benefits to needy school children. Fifty percent of the difference between the face value of the settlement and the amount of vouchers issued will be provided to public schools in the form of vouchers that may be used for the purchase of technology products and services. The vouchers for consumers and schools may be used on a very broad selection of products — including software, hardware and peripherals from any manufacturer and running on any platform. (Details are outlined in individual press releases posted at .)

Settlement agreements have also been executed in four other states — North Carolina, North Dakota, South Dakota and Tennessee. These settlements must still be approved by the courts of the respective states.

The company added that it has already set aside adequate reserves for the settlements announced today.

Together with the settlements announced earlier this year in California, Florida, Montana and West Virginia, the company has now reached settlement in 10 states in less than a year. All of these agreements require further court approval before they become effective, except for Montana, where the court has already granted final approval.

Those settlements announced today are similar in structure to the previously announced settlements with vouchers available to class members that may be used to purchase both hardware and software, with half of unclaimed vouchers provided to needy schools. In the 10 states that have reached settlement, nearly 10,000 schools stand to benefit from these agreements providing increased access to technology for over 4 million students.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.

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