Microsoft to pay $761M to RealNetworks

SEATTLE (Reuters) – Microsoft Corp. Tuesday said it will pay RealNetworks Inc. $761 million to resolve their disputes, including a lawsuit that accused the world’s largest software maker of using its dominance in operating systems to promote its rival media software.

The settlement caps years of backbiting between Microsoft and RealNetworks, whose chief executive Rob Glaser is a former Microsoft executive. RealNetworks (up $1.92 to $7.66, Research) stock soared after the announcement, jumping about 36 percent in active Nasdaq trading. RealNetworks, the Internet media software company known for its Real software, has said Microsoft’s decision to bundle Windows Media Player for free within the Windows operating system was to blame for slower sales at the RealNetworks’ business division. RealNetworks’ suit is the last remaining major antitrust action against the software giant, which has spent the last three years reaching agreements with several U.S. states, the European Union and other companies, such as International Business Machines Corp., Time Warner Inc. and Sun Microsystems. The cases came in the wake of the landmark 2002 antitrust settlement with the U.S. government.

Microsoft (down $0.15 to $24.31, Research) will pay RealNetworks $460 million in cash up front to resolve all damage claims. RealNetworks will also get licenses and commitments that give it long-term access to Windows Media technologies that will enhance the Real Player software.

Microsoft has also pledged to promote RealNetworks’ music and game subscription services through the MSN Internet network, specifically RealNetworks Rhapsody subscription music service.

Microsoft also said it will pay RealNetworks $301 million in cash and will provide services over 18 months to support Real’s product development, distribution and promotions. Microsoft will earn credits against the $301 million for subscribers to Real delivered through MSN.


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