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.

#60 Look at the example of Apple

by pkb351 <>

Friday May 30th, 2003 10:57 PM

You are replying to this message

Similar events at Apple a few years ago, excpet for one detail. Apple's agreement in return for Microsoft cash mandated the use of IE. Some forcast the end of the browser wars then, especially on the MacOS. But look at how history played out for Apple. Ever since the agreement mandating the use of IE ran out Apple has been working hard to become less dependent on Microsoft. Apple now has Safari. The iApps are a huge success. I I forget the name of the application, but Apple even has metting presentation software. Next I expect Apple to beef up Appleworks so that users can move away from MS MacOffice.

People gasped at the MacWorld annpouncement a few years back that Gates "paid" (actually bought 150 million shares of non-voting Apple stock) Apple to make IE the default Mac browser. People said this was the worst thing Apple could have ever agreed to and would spell the doom of the MacIntosh. RThis was not true. What this did was allow Apple some breathing room at a time when the compony was cash strapped. This was a very smart move by Steve Jobs!

The Apple situation is similar to the AOL/Netscape deal, though the AOL/Netscape deal has important diffefrences. Apple made was good for Apple. There is one major difference between the Apple deal and the AOL/Netscape deal. In the Apple deal there was the mandate that Apple must ship IE as the default browser. With the AOL/Netscape deal AOL recieves a liscence to use IE for seve years. There is no mandate in the settlement stating that AOL MUST use specific MS software (IE, Media Player). The major difference in this settlement is that MS is mandated by the terms of the settlement to promote AOL and its software on the Windows desktop. There is NOTHING in the settlement stating that the AOL software MS must promote has to include any specific MS software. The AOL software could include competting software such as Gecko or Firebird/Thunderbird.

This settlement is a win for AOL. It gives AOL some breathing room during a financial crunch. On the surface it seems like a bad settlement allowing MS to once again paly the winning hand. I do not believe this is so. Look to history and the Apple/MS deal a few years back. This was a win for Apple. The AOL/Netscape-MS settlement will be a win for AOL. Mozilla will come out on top.

Matbe now is the time to invite Steeve Jobs to join the AOL/Netscape Board of Directors.