Microsoft is to pay $750 million to AOL Time Warner as part of a settlement for an antitrust complaint filed last year. AOL Time Warner contended that Microsoft used its monopoly to to push Netscape (now owned by AOL Time Warner) out of Internet browser market. In addition to the cash, the settlement includes the following key points:

  • AOL will receive a seven-year, royalty-free license to continue using Internet Explorer on its flagship online service.

  • AOL receives a long-term, nonexclusive license to use Microsoft’s Windows Media 9 software, which offers playback, delivery and rights management for digital media.
  • The companies will explore ways for AOL and MSN Messenger to interoperate, which Microsoft has sought for years.

In my opinion, this settlement won’t hurt Microsoft, which reportedly had $46.1 billion in cash last quarter. Microsoft management probably sees this settlement as a $750 million “marketing pact” with AOL to push Internet Explorer and Microsoft Media Player products worldwide.

Notably, Microsoft will finally get MSN Messenger and AIM to interoperate, which just means less reason for consumers to install the AIM client. The MSN Messenger is already integrated into Windows XP and will probably be a part of future Windows versions.

AOL was already working on integrating ICQ and AIM instant messaging clients, which means that Yahoo! Messenger may become a solitary island in a sea of interoperable clients. If this all comes to pass, I foresee Yahoo! also joining the dark side to create a global instant messaging platform.

As the emperor, Emperor Palpatine not Bill Gates, would say, “Everything is proceeding as I have foreseen …”

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