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RealNetworks Settles Antitrust Lawsuit with Microsoft - 11 Oct 2005

In a one-side deal that hints at the legitimacy of RealNetwork's antitrust claims against Microsoft, both companies announced Tuesday that they had reached a wide-ranging settlement worth over $760 million. According to terms of the settlement, RealNetworks will drop all antitrust claims against Microsoft worldwide, while Microsoft will pay RealNetworks vast sums of money and promote RealNetworks services through various MSN services.

The companies, which had never tried to hide the animosity they feel towards each other, nonetheless played it nice on Tuesday. "This agreement will provide MSN’s millions of customers with easier access to subscription services for the music and games they love," said Microsoft chairman Bill Gates. "Digital music is one of the fastest growing segments of the online entertainment industry, and by promoting \[Real's\] Rhapsody subscription music services from within MSN, we will provide a better experience for our users."

Or something. In fact, the settlement is decidedly one-sided in Real's favor. Real will receive $460 million in payments to settle the antitrust suit, and $301 million to help spread Real's technologies and services. In addition, Microsoft will promote RealNetworks' Rhapsody service in MSN Music, MSN Search, and MSN Messenger, often to the detriment of Microsoft's MSN Music service. And in Windows Vista, users who click on links to RealNetworks formats will be automatically directed to a server for the appropriate download.

While the RealNetworks case was the last major antitrust case awaiting the company in the US, Microsoft still has to deal with antitrust watchdogs in the European Union (EU). An EU spokesperson said Tuesday that the RealNetworks settlement would have no impact on the EU antitrust case.

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