Microsoft Settles with Real for $761m

Microsoft and RealNetworks have announced a wide-ranging settlement of Real's long-standing antitrust suit, which is composed of three separate agreements valued at $761 million and resolves all disputes between the companies.

The music and games portion of the deal includes $301 million in cash and the marketing of Real's products and services. Real's Rhapsody music service will be showcased across Microsoft's Web properties, and the company's games offered through MSN Games and Xbox Live Arcade for Xbox 360.

In addition, Real will integrate MSN Search into RealPlayer and promote Windows Media technologies within Rhapsody to Go. Also, future versions of MSN Messenger will support Rhapsody to enable users to share and play music while chatting.

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The antitrust agreement includes a $460 million up-front cash payment to Real "to resolve all damages claims and a series of technology licenses." Real will also receive access to all future Windows Media technologies for use in its software.

As part of the deal, Microsoft will add a feature to Windows Vista that redirects a user to Real's Web site when trying to access a Real media file without the proper software installed.

After being a key player in the U.S. Department of Justice antitrust case against Microsoft, Real filed its own lawsuit against the company in December 2003. Real alleged that Microsoft used its operating system monopoly to effectively push Real out of the media software market.

Real also claimed that Microsoft secured deals with PC makers to restrict the installation of its software, and withheld crucial details about the inner workings of Windows.

But Microsoft chairman Bill Gates and Real CEO Rob Glaser finally shook hands Tuesday and put the past behind them. The agreement would end the last major legal threat standing in Microsoft's way. The company previously settled cases with AOL, Burst, CCIA, Novell and Sun Microsystems.

The settlement, which extends to all disputes worldwide, also could affect the European Union's battle against Microsoft, says Jupiter Research senior analyst Joe Wilcox.

"Real is the last-standing, real protagonist in the European Union's antitrust case against Microsoft," noted Wilcox. "During today's media conference call, Real chief executive Rob Glasser indicated that the worldwide settlement would affect the company's position in the European antitrust case. Real will no longer be involved."

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