Microsoft Settles with AOL for $750 Million
Microsoft Settles with AOL for $750 Million — Last week, Microsoft Corporation announced it would pay AOL Time Warner $750 million as part of a wide-ranging settlement of AOL’s 16-month old antitrust lawsuit against the company, ending one of the most troublesome legal disputes to come in the wake of the long-running federal antitrust case against Microsoft. The two companies announced the settlement would put past disputes behind them, and that they would immediately begin collaborating on media, technology, and bundling efforts.
The reported terms of the agreement would seem to represent a substantial victory for Microsoft, while enabling AOL Time Warner to put the litigation behind them and make a small dent in their estimated $26 billion corporate debt. Under the settlement, Microsoft grants AOL a royalty-free, seven-year license to Microsoft Internet Explorer, and the two companies will work together to leverage Microsoft media and distribution software for AOL Time Warner’s substantial print, music, and film content. Microsoft will also begin bundling America Online software with versions of Windows distributed by some PC manufacturers.
Bottom line: AOL Time Warner gets to put some money in the bank and will have an easier time deploying its content using Microsoft technologies. Microsoft gets out from under a difficult antitrust lawsuit (which would have leveraged the federal finding that Microsoft engaged in unfair trade practices), probably puts the final nail in Netscape’s coffin, and sets itself up as the gateway technology to AOL Time Warner’s considerable media holdings – a move which could have substantial implications for Apple’s online media fronts, including QuickTime and the new iTunes Music Store. [GD]