Microsoft and AOL-Time Warner Settle Anti-Trust Lawsuit Over Netscape Communications

As reported this morning on NPR Morning Edition and in the Wall Street Journal, Microsoft and AOL-Time Warner have reached a settlement in a private anti-trust lawsuit filed in January, 2002 by AOL on behalf of its subsidiary, Netscape Communications. Microsoft agreed to pay $750 million as a part of the settlement.

In a clear effort to define their roles, both Microsoft and AOL-Time Warner have agreed to collaborate on a series of initiatives designed to accelerate the general adoption of broadband digital content. A new, royalty-free seven year agreement was forged, providing AOL with license for Microsoft browsing and media distribution technology. In a blow to RealNetworks, which previously has allied with AOL to combat Microsoft’s influence, Microsoft Windows Media 9 Series will become a non-exclusive option for AOL customers to play a wide range of digital media.

The settlement helps AOL-Time Warner to more carefully focus on their core role as content developers and customer service providers. Microsoft will also give AOL with a new distribution channel for its services. The two will collaborate on providing Windows users who are also AOL subscribers with better support and overall experience. Both companies have also agreed to explore ways to make their respective instant messaging platforms compatible.

The big loser in this settlement is Netscape, which continues to be marginalized by the growing influence of Microsoft’s Internet Explorer. The seven year agreement clearly puts Netscape at a disadvantage, positioning the division of AOL-Time Warner outside the core sphere of influence.

AOL Time Warner and Microsoft Agree to Collaborate on Digital Media Initiatives and Settle Pending Litigation
May 29, 2003

AOL and Microsoft: 5 Questions
What does this the settlement mean for consumers, the companies and investors?
May 30, 2003: 5:26 PM EDT
By Paul R. La Monica, CNN/Money Senior Writer

Microsoft Search, The Sandbox,