Microsoft set to pay AOL $750m to settle dispute

No. 1 software maker Microsoft Corp on Thursday said it would pay $750 million to AOL Time Warner Inc to settle a 16-month-long anti-trust d...

No. 1 software maker Microsoft Corp on Thursday said it would pay $750 million to AOL Time Warner Inc to settle a 16-month-long anti-trust dispute as the rivals agreed to work together on internet-based media and technology. The wide-ranging deal marked the end of one of Redmond, Washington-based Microsoft’s most contentious legal disputes. AOL Time Warner said it would use the settlement money to pay down part of its $26 billion in debt.

‘‘The agreement we’ve reached marks a new phase of relations between Microsoft and AOL Time Warner,’’ Microsoft’s Bill Gates said.

As part of the deal, AOL won a royalty-free license to use Microsoft’s Internet Explorer browser technology for seven years. Microsoft will also distribute AOL’s online service software discs with Windows.

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AOL had charged Microsoft with abusing its monopoly power against Netscape, a Web browser that AOL bought in 1999 when Microsoft’s Internet Explorer was already overtaking it as the dominant browser.

The AOL anti-trust lawsuit, filed in January 2002, called for monetary damages as well as for competition to be restored in the market for Web browsers. Netscape pioneered a browser for mainstream users, which touched off the explosive growth of the Internet in the 1990s. Microsoft also said it would open data from ‘beta’ or trial versions of its Windows operating software to AOL, and let the company help develop the next generation of Windows, known by the code name ‘Longhorn.’

Both sides emphasised that Thursday’s agreement hinged on their shared interest in creating a bigger and more efficient market for digital media on the Internet.

Dan Sheeran, vice-president of marketing at RealNetworks, said the Seattle-based company’s relationship with AOL remained intact: ‘‘We work a lot with AOL in many different areas and AOL has assured that this announcement does not change that.’’

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AOL Time Warner chairman and chief executive Dick Parsons said the alliance with Microsoft was aimed at making it easier for media companies to embrace digital distribution, avoiding the kind of rampant piracy that the music industry blames for undercutting CD sales. Sun Microsystems Inc said it would press ahead with its own pending anti-trust lawsuit against Microsoft despite the AOL settlement. (Reuters)