Microsoft has agreed to pay $750 million to AOL Time Warner to settle pending antitrust litigation over the so-called "browser wars" in which Microsoft's Internet Explorer virtually wiped Netscape Navigator, owned by an AOL's subsidiary, from the desktop market. AOL will also get a seven year, royalty-free licence to use Explorer.
The companies announced the deal yesterday afternoon, adding that they will explore ways to establish interoperability between AOL and MSN Instant Messenger networks in a manner that will protect consumer privacy, security and network performance - something that will please millions of users of the currently incompatible messenger networks.
The companies will also collaborate on long-term digital media initiatives. Using digital rights management (DRM) technology, the companies aim to help develop a digital media environment that is secure from piracy, open to all companies across multiple industries, and offers consumers access to broad content in a compelling manner that is easy to use.
A long-term, non-exclusive license agreement also allows AOL Time Warner to use Microsoft software for creating, distributing and playing back high-quality digital media.
Bill Gates, Microsoft's Chairman and Chief Software Architect, said:
"While our companies will continue to compete, I'm pleased that we've been able to resolve our prior dispute and I'm excited about the opportunity to work together collaboratively to make the digital decade a reality."
The litigation settlement resolves the private antitrust lawsuit filed against Microsoft in January, 2002 by AOL on behalf of its subsidiary, Netscape Communications. Microsoft will pay $750 million to AOL Time Warner.
The two companies say they will co-operate "to ensure the best possible AOL member experience on current and future Microsoft operating systems, including commitments by Microsoft for technical cooperation and information disclosures."
AOL Time Warner's Chairman and Chief Executive Officer Dick Parsons commented:
"We welcome the opportunity to build a more productive relationship with Microsoft. Our agreement to work together on digital media initiatives marks an important step forward in better serving consumers and protecting the interests of all content businesses. We look forward to others in the media and entertainment industries joining together with us to help to advance the digital distribution of content to consumers while maintaining copyright protection."