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Microsoft to Pay AOL $750M in Settlement
aoteoroa writes "Microsoft will pay $750 million to AOL Time Warner to settle an antitrust lawsuit filed by AOL on behalf of its subsidiary Netscape last year, the companies said Thursday.
At first blush the deal looks good, but I can't help but wonder how a deal that ties AOL to IE again will negatively impact my favorite web browser." Here's a news.com story that also covers it. Is the browser war over? If so, it sure was anticlimactic.
I have to agree with the poster on this. I'm really
disappointed by this development. I would rather have seen an
agreement that required Microsoft to bundle AOL and Netscape
with their operating systems for the next 7 years. As much as I
get bugged by AOL's marketing, I really detest the thought of
these two combining forces.
I hope some of the states stick it out, and take the Anti-Trust
suit to the Supreme court. I think it would be incredibly
beneficial for the industry as a whole if Microsoft got busted
into chunks.
Sadly this ruling is nothing to Microsoft. $750 million is
something they can afford to pay using some interest from their
massive cash reserves
Doug Tolton
"The destruction of a value which is, will not bring value to that which isn't." -John Galt
AOL receives a long-term, nonexclusive license to use Microsoft's Windows Media 9 software, which offers playback, delivery and rights management for digital media.
AOL will receive a seven-year, royalty-free license to continue using Internet Explorer on its flagship online service. Microsoft will provide beta tests of future Windows versions and allow AOL to participate in tests of its upcoming "Longhorn" operating system at the same time and on the same terms as other software vendors.
The companies will explore ways for AOL and MSN Messenger to interoperate, which Microsoft has sought for years.
Sounds like Microsoft is getting everything they want...
Its too bad that there arn't any winners here. Satan can pay Satan all he wants.
AOL and Microsoft are not the same company, and Microsoft is the winner here. AOL has something like 30 million customers, and for the forseeable future most of them will be using Internet Explorer and Windows Media. The more people use IE, the less reason developers have to produce standards-compliant content in favor of IE-specific content, and the less reason people have not to use FrontPage or other products which work well with IE.
The more people use WMP, the less reason content producers have to use QuickTime or Real in favor of whatever Microsoft is selling for content creation and delivery.
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It's a business not a charity.
And MS is AOL's main competition.
Mozilla's not going anywhere. Having a full fledged IE / Outlook replacement for everyone not tethered to an exchange server is a Very Good Thing. MS gains far more from AOL using IE than AOL does, and they always have.
This deal just gives AOL seven years to decide if/when they want to switch over to IE.
Wait, I thought AOL was considering using Mozilla/Netscape instead of MSIE?
They were. They've been playing with beta versions of AOL based on Gecko (Mozilla/Netscape's rendering engine) for years now, and AOL for Mac OS X is based on Gecko. Apparently it was just a scare tactic to get Microsoft to play nice ("do what we want, or we'll switch to Gecko, and here's proof that we're not kidding").
Does it really matter, though? Most people are moving towards broadband, and most geeks don't go near AOL.
The more people use IE, the less reason web designers have to produce standards-compliant web sites in favor of broken sites with MS-specific extensions that only render correctly in IE. And that means when I use Mozilla or Safari or whatever non-Microsoft browser I want to use, I'm more likely to get pages that don't render correctly. In order to view those sites correctly, I'd have to run IE, and in order to do that, I'd have to run Windows, and that means money in Microsoft's pocket (unless I pirate it like everybody else).
So yes, this does matter, and it's a bad thing.
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What this settlement reflects is that the Time Warner part of AOL-TW is now firmly in control, and America Online people are not.
The Time Warner people are interested in selling media content for profit, not in technology battles like the AOL people. Hence the Windows Media 9 and DRM parts of the settlement.
Why continue to fight technology battles like IM or browser technology? There's no money in that. Nor is there money in continuing to make enabling technology like browsers etc. to sell your content for profit. Thus, the TW people are happy to use Microsoft browser technology and that's why the 7 year technology agreement is in there.
The AOL access business is slowly dying as people move to broadband, and the AOL-software-only subscription isn't going to replace that anytime soon. Sure, why not cooperate on IM formats? Not cooperating only opens AOL up to FTC complaints, and IM interoperability was at some point inevitable.
Microsoft was going to have to cooperate with AOL on Longhorn compatibility anyway; they give up nothing with that part of the settlement. Handing out AOL discs to system builders isn't much of a hit, either.
This is clearly the TW people saying "Take the $750 million, stop fighting battles that make no money, and go back to what made us huge long before AOL came along - selling content."
They say that $750 million is nothing for Microsoft as they have over $40 billion in the bank, but that's still almost 2% of their tresury, quite a significant amount for such a huge corporation. Am I the only one who thinks that 2% is a significant amount to be lost in a lawsuit?
"Safari for the Mac is one of the fastest and innovative browsers on the market."
I hear this a lot. Not intending to troll, but what is so innovative about Safari? The last time I saw something really new in browsers was Opera 7's 'Fast Forward' to match the likely next link (or work for image galleries), before that maybe Opera's 'Find in page' or Mozillas 'Type ahead find'.
What is so innovative in Safari? From what I've seen so far, it doesn't add anything new that other browsers lack.
Winners
MS - they get off the hook by giving up $750m which others have pointed out they can easily afford given their cash reserves. More guaranteed market share for IE. This isn't a penalty, its an investment for them.
AOLTW - Given how the AOL division is a primary cause of the massive amount of AOLTW's debt, getting the $750m looks great on their balance sheet. If I'm not mistaken, dealing w/ AOLTW's debt was one of Dick Parson's most important charges when he took the helm.
Losers
Mozilla et. al - Having a Gecko based AOL client would have given an instant boost to Mozilla's marketshare / mindshare which negatively effects...
Web Standards - Anything that boosts IE and lessens Mozilla increases the likelihood of MS induced standards
Consumers - Less competition (browsers, streaming media formats), more MS entrusted DRM
Jeesh - what exactly does antitrust even mean in today's business climate?
For the love of $DEITY, loose != not win!!!!!
You are missing an important point: AOL/TW make money from the movie, they lose money from the development of a browser when they already have one for free.
This is an M$ move to cut the competition out of the game by removing development funding.
An infinite number of monkeys will eventually come up with the complete works of
Mind you, I consider this a Very Bad Thing. I don't like seeing any company, much less Microsoft, control such an important technology so thoroughly. And MS's sloppy attitude towards W3C standards (especially CSS) drives me up the wall. But simply creating superior browser technology is not going to win back all those desktops. It doesn't matter if kHTML or gecko are more innovative or standard-compliant. Nor does it matter who has the coolist features. And least of all does it matter that MS used dishonest and monopolistic tactics to gain 90% of the browser market.
What matters is that IE has that browser dominance, that people are not going to switch back just because some geek tells them their browser is technically inferior. Nor do they crave standards compliance: that just means that other browsers don't render all their IE-specific web apps "correctly".
Don't put your hope in AOL switching to Gecko, either. First of all they won't do it -- they can afford a few license fees in order to avoid making life even more difficult for their subscribers. Second of all, AOL doesn't have that much of a future -- web users are getting more sophisticated, and realizing they don't need that bloated and obsolete client to access the Internet.
Flame on! I know you guys don't want to hear it. But yeah, MS has won the browser wars.
Microsoft just payed AOL $750 million in return for AOL continuing to use IE. If AOL didn't have Netscape to use as a bargaining tool/threat, there's no way they would have been able to get so much cash from Microsoft.
Netscape development just turned a big profit for AOL.