Risk Management

Latest Microsoft Antitrust Deal: $761M

Even so, a European Commission spokesman calls the settlement "completely irrelevant" to the commission's continuing antitrust case.
Craig SchneiderOctober 11, 2005

Microsoft Inc. announced that it will pay RealNetworks Inc. $761 million to settle its last major antitrust case and to build an alliance for digital media and games.

A first payment of $460 million in cash will resolve all RealNetworks claims and enable the company — until now a fierce critic of Microsoft — to obtain long-term access to the Windows Media technology platforms for its own software development. Microsoft will pay the balance, $301 million, over 18 months for the development and promotion of software and services. The partnership will provide support for Real’s digital-music subscription service, Rhapsody, on MSN properties and in some of Microsoft’s XBox games.

Bill Gates, Microsoft’s chairman and chief software architect, championed the settlement with RealNetworks in a statement. “Digital music is one of the fastest growing segments of the online entertainment industry, and by promoting Rhapsody’s subscription music services from within MSN, we will provide a better experience for our users,” he said.

Including the deal with RealNetworks, Microsoft has spent more than $4 billion to resolve disputes with rival businesses, according to The New York Times, which noted a payout to IBM for $775 million this past summer and $1.6 billion to Sun Microsystems last year. The Associated Press also observed that other companies on Microsoft’s settlement list include Novell, the Computer and Communications Industry Association, and Time Warner.

Plaintiff that still have claims outstanding against Microsoft, the wire service added, include AudioBanner.com, the Free Software Foundation Europe, and two industry groups, the Software & Information Industry Association and the European Committee for Interoperable Standards. RealNetworks is reportedly a member of both those groups.

European Commission spokesman Jonathan Todd called the settlement “completely irrelevant” to the commission’s continuing antitrust case against Microsoft, according to the AP. “We will continue to ensure full and complete compliance with the March 2004 decision,” he said. “The role of the commission is to ensure the proper application of EU competition law for the benefit of consumers and companies in Europe.”

The European Commission’s March 2004 decision — that the company abused its monopoly position in personal computer operating systems — reportedly required Microsoft to release a version of Windows XP without its well-known Media Player software, which essentially performs the same job as RealNetworks’ flagship product.

The Times also noted that regulators in Brussels have appointed a computer scientist to monitor Microsoft’s compliance with the judgment, which also assessed a fine of $597 million and required the company to disclose source code for its operating system to its rivals. Microsoft has stated that it is appealing the ruling; no date has been set.