Microsoft Pays Netscape $750 Million to Settle Antitrust Suit

Thursday May 29th, 2003

Several people wrote in to tell us that Microsoft has agreed to settle the private antitrust suit filed against it by Netscape Communications Corporation last year. Microsoft will pay AOL Time Warner, Netscape's parent company, $750 million to end the litigation. In a related agreement, Microsoft will give AOL a seven-year royalty-free license to use Internet Explorer and a long-term license to use its Windows Media 9 Series technology. The two giants have also agreed to work together on digital media initiatives and establish interoperability between the AOL Instant Messenger and MSN/Windows Messenger networks. In addition, Microsoft will give AOL more technical information about Windows and help AOL to distribute its software to some PC vendors.

CNN/Money, CNET and all have articles about the settlement. More details are available in Microsoft and AOL Time Warner's joint press release.

Update! Further reports are available from Slashdot, MSNBC, PC Magazine, InfoWorld, InternetNews, ENT News, EE Times and the Associated Press (via InformationWeek). Meanwhile, CNET asks if the IE licensing deal means the end of Netscape.

Another Update! CNET now has an entire special coverage section on the deal, which includes a longer updated main article. The report has also been revised and other stories can be found at Wired News, BetaNews and Reuters.

Another Update! Microsoft's PressPass site has a transcript of a press conference call with Microsoft's Bill Gates and AOL Time Warner's Richard Parsons, which has been extensively referred to by many media reports. A collection of soundbites from Bill Gates is also available.

Another Update! Matt Kraai writes: "Salon is carrying an article on the Microsoft/AOL TW settlement and its effect on Mozilla. I found it via Boing Boing." To read the article, you'll either have to subscribe to Salon Premium or view a short ad, which will give you access to Salon for the day.

#34 Might happen

by bandido

Friday May 30th, 2003 5:13 AM

You are replying to this message

Huh? AOL site is still AOL site. Netscape portal and the entire Netscape side of the business can be sold to some suitable party. Why is that impossible? AOl-Time Warner keeps saying they want to reduce their debt load which is very close to $30 billion. How do you think they are going to do that? 1) they will sell or divest out of most of the cable TV delivery companies they own or partially own (not necessarilly the cable channels like CNN, etc which they are going to keep), 2)Sell units that are not essential to their business line (Netscape, etc.), 3)Cost cutting (layoffs, increase efficiencies, reduce overhead expenses, etc.); 4) Increase revenues (advertising, collaboration, marketing agreements, e-commerce, stabilize subscription base, etc)

People tend to think when a company is not doing well financially they will sell bad business lines. On the contrary, sometime they are better off selling "crown jewels' from where they can raise more cash. (BTW, AOL is still very profitable, problem is they are not growing enought to satiate corporate/stockholders greed/return on investment). Maybe now is the time for S. Case and some other investors to buy back AOL out of Time Warner. Am sure Time Warner will resist selling AOL division because they would be selling it at a low stock price after they merged a few years back when AOL was at a high stock price. (There are plenty of precedents for companies buying at higher price and selling later at a depressed price; e.g Novel buying WordPerfect for several hundred millions dollars and then selling it to Corel for a fraction of what they'd paid.)