Microsoft Antitrust Payments to Top $6.5bn Following Gateway Settlement

Microsoft's payments to escape antitrust trouble are set to reach $6.5bn, following a $150m settlement with Gateway, a PC maker, and a $550m provision against further legal claims. Adding to this, a $43m charge for a settlement with Burst.com and a $700m pre-tax charge in the latest quarter, the company's antitrust woes are far from over.

Key Takeaways:

• Microsoft has reached private agreements with six companies in the computer industry, incurring costs of over $3.5bn.
• The company has also settled state-level antitrust suits in the US, incurring costs of over $1.8bn, and paid a fine of about $600m to the European Commission.
• A private case bought by RealNetworks and a class action in New York are among the biggest payments still to come, with the first potentially worth hundreds of millions of dollars.
• The Gateway settlement is linked to the company's use of Microsoft software in launching products such as PCs with the next generation of Windows operating system.
• Microsoft shares some of the costs with computer makers for advertising machines based on its products, but the payment to Gateway is a distinct legal settlement.

Statistics:

• $6.5bn: the total payments Microsoft is expected to make to escape antitrust trouble.
• $150m: the payment made to Gateway for a settlement and $550m provision against further legal claims.
• $43m: the charge for a settlement with Burst.com.
• $700m: the pre-tax charge in the latest quarter.
• $3.5bn: the combined cost of private agreements with six companies in the computer industry.
• $1.8bn: the costs of settling state-level antitrust suits in the US.
• $600m: the fine paid to the European Commission.
• $536m: the settlement received by Novell last year.

Sources:

• Financial Times Limited 2005.