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October 11, 2005

Microsoft settles with RealNetworks

Posted by David Hunter at 9:20 AM ET.

I received an entry in the Microsoft Press Pass RSS feed whose link now doesn’t go anywhere, but says:

Media Alert: Microsoft Corp. And RealNetworks, Inc. Press Conference
Press Release

Microsoft Chairman and Chief Software Architect Bill Gates and RealNetworks Chairman and Chief Executive Officer Rob Glaser make announcement.

Since a settlement is rumored, I expect it really is coming up later today.

UPDATE: They did settle:

Microsoft and RealNetworks, Inc. today announced three agreements valued at $761 million to RealNetworks to settle their antitrust case and create a new partnership to innovate and promote consumer choices in digital music and games.

The three agreements include an agreement to resolve all the companies’ antitrust disputes worldwide; an agreement for a wide-ranging digital music collaboration between the parties, including promotional and marketing support of Real’s leading digital music subscription service, Rhapsody®, on MSN properties; and an agreement to offer RealNetworks’ digital games through MSN Games and Xbox Live Arcade for Xbox 360.

Under the music and games agreements, Microsoft is scheduled to pay Real $301 million in cash and provide services over 18 months in support of Real’s product development, distribution, and promotional activities. Microsoft will earn credits at predetermined market rates to be applied to the $301 million for subscribers delivered to Real through MSN. Additionally, Real will take steps to support MSN Search, and Real and Microsoft will jointly promote use of Windows Media technologies with Rhapsody to Go.

The antitrust and technology assurance agreement resolves all antitrust disputes worldwide, based on a $460 million up-front cash payment to resolve all damages claims and a series of technology licenses and commitments under which Real will obtain long-term access to important Windows Media technologies that will enhance Real’s media software solutions.

Quick reaction:

Short term: Microsoft gets RealNetworks off their back here and in the EU. RealNetworks gets cash.

Longer term: Unclear what the full effects will be, but nominally each gets some help strengthening some of their initiatives.

Filed under Alliances, Antitrust, Coopetition, Legal, RealNetworks

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One Response to “Microsoft settles with RealNetworks”

  1. Goodbye MSN Music, hello Zune Marketplace -- Microsoft News Tracker Says:

    [...] The Rhapsody part is due to the legal settlement with RealNetworks, but the Zune Marketplace referral is a bit of a puzzle since the Zune format is supposed to be incompatible with the PlaysForSure format which is the standard on MSN Music. However, the MSN Music FAQ about the change says that the Zune Marketplace is the place to go for current MSN Music users, so presumably it will offer both formats. The PlaysForSure hardware vendors that Microsoft recruited for the last attempt are going to love that. Filed under Coopetition, Digital Media, Technologies, Apple, RealNetworks, DRM, Microsoft, Argo, Zune [...]

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