AOL, Microsoft Reach Settlement, Digital Media Agreement

NEW YORK AOL Time Warner and Microsoft reached a settlement Thursday that resolves pending litigation between the companies. The two companies also have agreed to collaborate on digital media initiatives in an attempt to accelerate the adoption of digital content.

As a part of the legal settlement, which resolves a lawsuit filed against Microsoft by AOL Time Warner, the former will pay the latter $750 million. The private antitrust lawsuit was filed in January 2002 by the media giant’s America Online unit on behalf of its subsidiary, Netscape Communications.

In addition, the settlement calls for Microsoft to provide AOL with a new distribution channel for its software to certain PC users worldwide. The two companies will also cooperate to ensure the best possible AOL member experience on current and future Microsoft operating systems.

Under the digital media pact, the companies said they will work together to broaden consumer access to high-quality digital content in areas such as online music services offering single downloads and/or monthly subscriptions and authorized Internet access to movies. Also, the companies have entered into a long-term, non-exclusive agreement allowing AOL Time Warner to use Microsoft’s Windows Media 9 Series and future software for creating, distributing and playing back digital media.