Microsoft pays $750 million settlement to AOL; companies will ‘cooperate on digital media’

This deal could hurt AAC (Apple’s chosen delivery format for its iTunes Music Store) big time.

“Microsoft is paying $750 million to AOL Time Warner as part of a wide-ranging settlement that also calls for the companies to jointly cooperate on software distribution and digital media. As part of a wide-ranging deal announced Thursday, the companies will drop pending litigation, including an antitrust complaint filed by AOL Time Warner’s Netscape Communications unit in January 2002 against Microsoft. AOL also agreed to a seven-year royalty-free license of Microsoft’s Internet Explorer browser. ‘It seemed like an opportunity to do something smart for both companies was present,’ AOL Time Warner CEO Richard Parsons said during a conference call with reporters. Microsoft Chairman Bill Gates added during the call, ‘It puts any past issues behind us. It extends the technical cooperation we’ve had with AOL on the browser while increasing cooperation in other areas such as new ways to distribute digital content,'” report Ian Fried and Jim Hu for CNET News.

Key elements of this deal with the devil include:
– Exploring AOL and MSN Messenger interoperability
– Microsoft will help distribute AOL CD-ROMs to Wintel box assemblers
– AOL receives a long-term license to use Microsoft’s Windows Media 9
– Finding ways to increase the adoption and distribution of digital media via Windows Media format

There is no word, yet, on the fate of AOL’s plans to use Dolby Laboratories’ AAC (also the iTunes Music Store format) audio technology in its Internet radio products that we reported on earlier today. But you can draw your own conclusions as to what will happen with that plan now.

Full article here.


  1. Here comes MS, paying off companies to use their Windows Media format – you could see it coming a mile away.

    Hope Steve Jobs has an ace up his sleeve.

    Mac OS X on x86, anyone? Hit ’em where it’ll hurt, Steve!!!

  2. Interesting move here, but this isn’t a buyoff, it’s a cash settlement. Still, the licensing of WMA doesn’t sound good… though if AOL has brains they’d do everything they can to make both WMA and AAC file formats available to their customers.

  3. This just makes me HATE M$ even more!!! monoplying the market with bribes!

    Money can buy ANYTHING, huh? What is F**k is the world becoming???!!!!

  4. Yup and how about perhaps using Windows Media 9 to launch the largest online music store tied into AOL somehow (jeez). This is very bad news for AAC and Quicktime. Also if this happens MS could give us Apple users a crippled Media player and we’d be SOL.

    I work for a Canadian film studio and MS is making huge inroads with the tablet PC with writers and producers using Final Draft script writing software. They love the thing. I hope Apple has device coming because they could loose the market here and be screwed.

  5. All I see here are two huge old dinosaurs trying to make something new by combining old ideas. Apple has nothing to worry about. Neither M$ nor AOL has ever produced anything of quality.

    There is no reason for Porche to worry if Ford and GM collaborate on a project.

    Until Apple has a smaller market share than Porche does in their respective industries, I’m not going to worry.

  6. Joe wrote:

    “This is very bad news for AAC and Quicktime. Also if this happens MS could give us Apple users a crippled Media player and we’d be SOL.”

    Microsoft already DOES offer a crippled media player: ever tried playing a Windows Media link that has DRM? There is no Digital Rights Management in the current version of the Mac player, meaning most of the good Windows Media clips out there ( comes to mind) won’t play on the mac, argh! They always win…

  7. As usual MS makes the smart business move, and uses its overwhelming financial strength to leverage its inferior technology onto an unenthusiastic market. They will of course also continue to provide inferior MacOS players to ensure that us Mac users have an worse experience.

    Still it’s the American way. Just like how your government treats the rest of the world. Freedom fries anyone?

  8. You know what – good for them. It is news like this that forces Apple to stay on their toes and push the bar even higher. I hate Windose just as much as all of you, but without their persistence I would not have the hardware and software I use and love today. So I say good for AOL and M$ – I can not wait to see what other great improvements it forces for me and my Macs.

  9. microsoft cant afford to be in a habit of giving 750 mil (almost a billion dollars away) i have read somewere on the internet that ms only has 45 billion in the bank,revenue from ms office is falling due to competion and high price linux is begining to squeeze ms in the server and budget
    consumer markets and apple is a big pain in the ass for ms due to being constantly five or six years ahead of readmonds game.i think in five to ten years time microsoft will a much smaller company because the the competion from apple and linnux will have matured into very saleable products leaving a lot of variety on the high street, if i had my way i would like to see the consumer market become like this 30% budget pc: linux os based 40% middle ground pc: windows os based and 30% cream of the crop pc os x apl macintosh COMPETION IS GOOD FOR EVERYONE EVEN APPLE AND ESPECIALLY MICROSOFT.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.