SEATTLE – RealNetworks Inc. (RNWK) announced Tuesday it had settled its antitrust lawsuit against its longtime adversary Microsoft Corp. (MSFT), marking the end of the last major antitrust case against the world's largest software maker.
The digital media company said it had reached three deals with Microsoft worth $761 million. That includes a $301 million cash payment and the establishment of music and games partnerships designed to help RealNetworks products reach a wider audience.
In exchange, RealNetworks agreed to drop all its antitrust claims against Microsoft worldwide.
"Today we're closing one chapter and opening a new one in our relationship with Microsoft," Rob Glaser, RealNetworks' founder and CEO, said in a statement released before a joint news conference.
• RealNetworks CEO Rob Glaser will be Cavuto's guest on Your World at 4 p.m. ET
Seattle-based RealNetworks sued in December 2003, accusing Redmond, Wash.-based Microsoft of illegally forcing Windows users to accept Microsoft's digital media player. RealNetworks said its player suffered as a result.
RealNetworks has for years been one of Microsoft's direct competitors in the growing field of digital music and video. But the smaller company has struggled in the face of its massive rival, which Glaser left to form RealNetworks. Both companies have also found it tough to compete against digital music's juggernaut: the iPod digital music player from Apple Computer, Inc. (AAPL ) and the company's iTunes online music store and jukebox software.
Tuesday's settlement is the latest in a series of peace accords that have cost Microsoft several billion dollars in recent years but have also served to put many of the cash-rich company's legal woes behind it.
In July, Microsoft reached an $850 million deal with International Business Machines Corp. That followed a $1.6 billion settlement with Sun Microsystems Inc. (SUNW) in 2004 and a $750 million truce with America Online, part of Time Warner Inc. (TWX ), in 2003.
Microsoft spokeswoman Stacy Drake said two companies have antitrust cases pending against Microsoft: handheld pioneer Go Computer Inc. and Novell Inc., formerly a major networking software maker and now a top distributor of the Linux operating system.
As part of the settlement, Microsoft is to provide RealNetworks with services supporting product development, distribution and promotion over the next year and a half.
RealNetworks also will take steps to support Microsoft's MSN Search, and the companies agreed to jointly promote use of Windows Media technologies with Rhapsody to Go, one of RealNetworks' music subscription services.
"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," Microsoft Chairman Bill Gates said in a statement.
RealNetworks, whose media players distribute audio and video to devices ranging from computers to smart phones, had been the last big commercial opponent in a European Union antitrust case against Microsoft.
In that case, Microsoft was ordered pay 497 million euros ($597 million) and to produce a version of its Windows operating system stripped of its own multimedia player to provide a more level playing field for competitors led by RealNetworks.
Microsoft is complying with the ruling while appealing it.
On Tuesday, the EU said the RealNetworks settlement would not affect the looming court clash.
"The role of the (European) Commission is to ensure proper application of EU competition law for the benefit of consumers and companies in Europe," EU spokesman Jonathan Todd said.