Microsoft Will Let AOL License Browsing, Digital Media: Settlement

America Online will license Microsoft browsing software and digital media technology for seven years and collect a $750 million settlement payment to keep an antitrust lawsuit against Microsoft from going further, the two Internet giants announced May 29.

"We welcome the opportunity to build a more productive relationship with Microsoft," said AOL Time Warner chairman and chief executive officer Dick Parsons. "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."

The deal settles AOL's January 2002 lawsuit against Microsoft on behalf Netscape, which AOL bought up and who had originally complained that Microsoft used anti-competitive practices - including making certain deals with computer makers - to try to freeze out Netscape's Navigator browser. The deal also calls for Microsoft to give AOL the technical information it needs to help AOL products run efficiently on the Windows platform, the two companies said.

"These agreements are good news for the AOL service, its members and the Internet as a whole," said AOL division chairman Jonathan Miller. "It provides America Online with certainty that, as Microsoft develops new operating systems and platforms, the AOL service will work optimally with them to the benefit of our members worldwide."

For Microsoft mastermind Bill Gates, the AOL deal means acceleration of digital media and help for all manner of content providers, through a union of Microsoft's media technology and AOL's content expertise. "While our companies will continue to compete," he said, "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 deal lets AOL use Microsoft's Windows Media 9 series platform and successor digital rights management software programs, meaning AOL can expand its digital content spread and "make it easy and profitable to provide consumers with convenient access to the vast selection of content that AOL Time Warner distributes," the companies said in their announcement. They'll also work together on developing ways to stop the slowing of high-quality digital content, including increasing availability options, technical protection, public and legal alignment for consumer advancement, and intellectual property and copyright protection information.

The deal also means Microsoft browsing and Windows compatibility to AOL services, including a royalty-free seven year license to use Internet Explorer with AOL clients, and Microsoft's committing to give AOL technical information in Windows test versions at the same time it goes to other software vendors. Microsoft also agreed to let AOL join in on other next-generation development programs with the other vendors, and make AOL's popular Instant Messenger interoperable to Microsoft's similar programming, with a particular focus on privacy, security, and network performance, the two companies said.

Microsoft senior vice president Will Poole said the deal means both companies are committed to expanding consumer choices and high-quality access while making new opportunity fields for content owners and promoting innovation all around the cyberblock. "Establishing a vibrant digital content marketplace is a tremendous challenge but not an insurmountable one," he said. "And I'm confident that both companies, working together with the rest of industry and consumers, can create a framework for addressing these critical issues."