Microsoft Corp to pay $1.5 billion to settle claims over data breach

By MICHAEL MARLINESThe New York Times/CBS NewsThe Associated PressWASHINGTON (Reuters) – Microsoft Corp on Tuesday agreed to pay a record $1 billion to resolve claims that the company’s data breaches made it vulnerable to cyber attacks, a move that also could bring the software maker closer to its long-awaited $20 billion purchase of the music streaming service Pandora.

Microsoft Corp said it would pay $5.3 billion to compensate the U.S. Department of Justice, which alleged in a lawsuit that the data breach at the company could have endangered people, businesses and the public.

The Justice Department said the settlement includes $750 million in cash, including $250 million to cover legal fees, and $1 million to pay the costs of investigating the matter.

Microsoft said the company also will contribute $250,000 to the American Civil Liberties Union to help defray legal expenses.

Microsoft agreed to the settlement in a court filing, a day after the Justice Department announced its investigation into the data breaches.

The case is not related to the privacy breach, which Microsoft disclosed on Tuesday.

The announcement of the settlement came hours after the company disclosed it had reached a $2.5 million settlement with the Federal Trade Commission.

Microsoft had sought $5 billion for the alleged breaches, but the company was seeking a lower price.

The settlement, if approved by a court, could be the largest in U.C.L.A.’s history.

The company has long argued that the privacy breaches were a product of poor coding and the company did not have the resources to defend itself in court.

Microsoft, however, said the data leaks were not its fault and that the federal government had “a reasonable expectation of privacy” for its data.

The court filing also said Microsoft is seeking an order to remove the personal information from its websites, as well as to limit access to personal information.

“The allegations against Microsoft are without merit and are without legal basis,” the filing said.

Microsoft did not immediately respond to a request for comment.

The settlement comes just a day before a deadline for companies to file proposed final antitrust charges against the government, which could lead to a decision on the company acquiring Pandora, the streaming service.

Pandora has been an early target for Microsoft, which has been battling to acquire the music-streaming company since 2006.

In addition to the $1-billion settlement, Microsoft will pay $250.5 to settle charges by the Federal Bureau of Investigation and the Federal Communications Commission.

The Justice Department’s complaint against the company alleged that Microsoft improperly collected data from people who downloaded software without their permission.

A federal judge in Washington on Monday granted a request by the Justice and Commerce Departments to require the company to disclose more about its data-collection practices.

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