NEW YORK — See Bill pay. See Bill and Dick make up.
Bill Gates’ Microsoft said Thursday it will shell out $750 million to AOL Time Warner to settle a private antitrust lawsuit filed last year by America Online on behalf of its Netscape subsid. Formerly bitter rivals, the two corporate giants have have also agreed to sweeping cooperation in key areas including instant messaging, digital piracy and distribution.
The clouds have been lifting for AOL Time Warner lately. The company’s shares, recently struggling in the single digits, have hit $15. The company has installed new management and — top execs insist – has a renewed sense of cooperation and optimism. Unresolved federal probes into AOL’s accounting are the one specter preventing a real uptick in the stock.
The latest pact is a testament to AOL Time Warner chairman-CEO Richard Parsons’ consummate skills as a “people person.” It also reveals a Bill Gates somewhat humbled by incessant litigation (and, suggested CNBC’s Tina Brown earlier this week, possibly mellowed by fatherhood).
Parsons said during a conference call he plans to use the cash to pay down AOL TW’s $24 billion debt — news sure to delight Wall Street.
A new era of cooperation between the media and software giants promises to give America Online a much-needed boost as it seeks to lift profits and attract new subscribers.
“This marks a new day of looking to the future to expand opportunities for our companies. In areas where we compete, we can continue to compete vigorously on a level playing field,” Parsons said. “Pursuit of litigation is rarely constructive. I look forward to the possibility of building a more productive relationship with Bill,” he added.
He said Gates had called him six to eight weeks ago to discuss a settlement.
Digital rights management — to prevent illegal copying of music or video — is a key area of collaboration.
“There’s been interest in having a media company and a technology company take a bold step. It probably surprises people to see AOL Time Warner and Microsoft join forces to address it,” Gates said.
This is quite a shift for former archenemies. Microsoft’s aggressive rollout of its Internet Explorer browser during the 1990s decimated Netscape and other competing services and triggered a number of antitrust lawsuits — including a huge case brought by the Justice Dept. and 17 states.
AOL has also faced growing competition from Microsoft’s MSN Internet access service.
The great thaw includes a long-term, non-exclusive license agreement allowing AOL TW to use Microsoft’s Windows Media digital technology. The move will help AOL TW expand distribution of digital content as the partners work on developing safe ways to distribute music, movies and high-definition content online.
AOL staffers will actually be permitted to work out of Microsoft’s Redmond, Washington headquarters. And the two companies will set up a so-called Executive Council to meet periodically “to promote the long term development of a constructive relationship between them,” according to a statement.
Microsoft will make its browser and Windows technology compatible with AOL’s service and will provide AOL software discs to smaller PC makers that use Windows. The two will explore ways to establish compatibility between AOL and MSN instant messaging networks.