Microsoft pays AOL $750M to bundle IE

May 30, 2003 05:23 · 233 words · 2 minute read

Microsoft, having been found guilty of abusing monopoly power and sued by Netscape which it had essentially driven from the market, has reached a settlement with AOL, current owner of Netscape. According to the settlement, Microsoft will pay AOL $750 million. But, check this out:

Under the terms of the settlement, AOL, the world’s No. 1 Internet services provider, won the option to use Microsoft’s flagship digital media software as well as its Internet Explorer technology for Web browsing on a royalty-free basis for seven years.

To me, this paints the picture of AOL, stock battered, lots of debt, deciding that they don’t feel like continuing a long, drawn-out multiyear lawsuit with a company that has more cash than Fort Knox. So, Microsoft says “Hey! We’ll give you $750 million in cash if you’ll continue to use IE and also embrace Windows Media.” This is probably a pretty good deal for Microsoft, because

1) They were found guilty.

2) IE has not been visibly going anywhere, whereas AOL’s Netscape/Mozilla is releasing featureful new versions every 3 months

3) AOL’s WinAmp is fairly popular, too

4) AOL Time Warner happens to own one of the major record labels and a movie studio to boot

Maybe I’m reading too much into this, but somehow I doubt it. The one good thing is that AOL and Microsoft will reportedly cooperate on making their IM platforms interoperate.