Microsoft dealt anti-trust blow

Microsoft has failed in its bid to settle hundreds of anti-trust law suits by donating software to America's poorest schools.

The proposed £1.1bn deal between Microsoft and lawyers representing over 100 private antitrust suits was thrown out by a US district judge late on Friday.

Judge J Frederick Motz said that the deal could be anti-competitive, as it was likely to extend Microsoft's presence in the education market at the expense of its rivals and, somewhat ironically, act against the best interests of computer users.

"To put it bluntly, in the words of the opponents of the proposed settlement, the donation of free software could be viewed as constituting 'court-approved predatory pricing,'" the judge wrote in his ruling.

Apple and Red Hat - two of the most outspoken critics of the original settlement - have in essence won the day. As soon as the deal was mooted they pointed out that if Microsoft was serious in its desire to help the schools, it should donate cash, not its own software, thereby leaving teachers free to spend as they wished.

Microsoft could still up its cash offer - an option left open to it by the judge - but it's more likely that the class action lawyers who had agreed to the deal will return to court to pursue their cases, meaning Microsoft will be facing many more years of court action.

It's estimated that this process could cost the software giant more than $10bn in damages.