A US federal judge has rejected Microsoft's offer to donate $1bn worth of computers and software to underprivileged schools.
The ruling means that the software giant will have to negotiate a new settlement or fight each of the suits individually.
US District Court Judge Frederick Motz said that he would not go along with the settlement negotiated in November with more than 100 plaintiffs which joined in a class action suit.
The plaintiffs alleged that Microsoft used its market dominance to charge unfair prices for its software.
In his ruling Judge Motz said: "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'.
"While schools would be allowed to purchase non-Microsoft products, they would have an incentive to choose the software giant's products because Microsoft software would genuinely be free."
The judge also concluded that a private foundation established to administer the school donations would not be adequately funded.
Following the court's decision, Tom Burt, deputy general counsel at Microsoft, said that, while the company is confident that it will prevail in these lawsuits, it has no plans to appeal at this stage. "Microsoft went the extra mile to make this settlement work," he claimed.
Burt maintained that Microsoft would like to get these matters resolved. "We're going to continue to do so whenever it makes sense to the company," he said.
He emphasised that Microsoft would rather achieve negotiated settlements instead of heading back to court "when that's reasonable".
Rob Enderle, an analyst at Giga Information Group, said that this was bad news for Microsoft, particularly because of the reasons for its proposals being rejected. "Evidently the judge felt the punishment was too small, suggesting that a much larger material penalty is in the works," he warned.
Enderle added that it might also put additional pressure on the judge handling the larger Department of Justice settlement to significantly strengthen that one or reject it as well.
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