Microsoft Settles with Real for $761 Mln

Microsoft and RealNetworks bury the antitrust hatchet with Microsoft shelling out $761 million. (Oh, and they're going to work together, now.)

The last major antitrust Battle in Seattle came to an end today: Microsoft and RealNetworks have announced they’ve resolved Real’s antitrust case against the Redmond-based software giant. Three separate agreements have Microsoft forking over $761 million to RealNetworks and create a new partnership between the two companies to “innovate and promote digital music and games.”

The three agreements settle all of RealNetworks’ antitrust disputes worldwide, enable “wide-ranging” digital music collaboration between the companies (including marketing support for Real’s Rhapsody music subscription service on MSN properties), and an agreement to offer RealNetworks’ digital gamed through Microsoft’s MSN Games and Xbox Live Arcade for Xbox 360.

The music and games agreement has Microsoft paying RealNetworks $301 million over 18 months to support Real’s development, distribution, and marketing, although Microsoft will “earn credits” against that $301 million for any subscribers delivered to Real’s services through MSN. RealNetworks, in turn, will begin supporting MSN Search and promote Windows Media on Rhapsody To Go. In brief:

• MSN Messenger users will be able to share and play music from Rhapsody while chatting.
• MSN Search will use Rhapsody’s music editorial catalogue to help users find music.
• Microsoft and RealNetworks will work together to enable MSN Search within RealPlayer.
• MSN Search will feature Rhapsody music links in music-related search results.
• Real will be able to purchase advertising to promote Rhapsody on MSN Search and on the MSN Network.
• Both companies will promote Windows Media portable devices for Rhapsody to Go.
• Both companies will collaborate on “casual games,” with Real creating a new subscription service to be offered on MSN Games, as well as new casual games for Xbox Live Arcade for Xbox 360.

The core antitrust agreement settles all antitrust disputes between the companies for a lump-sum $460 million payment to RealNetworks, which resolves all claims for damages and grants RealNetworks long-term access to key Windows Media technologies. In addition, Microsoft will enhance Windows users’ ability to access RealNetworks’ software by directing customers to Real Web pages if they don’t have software to play a Real media file, as well as making it simple and straightforward for customers to choose preferred players and media settings. The companies will also work to ensure interoperability between Real’s Helix DRM system and the DRM capabilities of Microsoft’s Windows Media technologies. Microsoft is also providing contractual assurances that Real will have broad access to the PC OEM distribution channel.