Microsoft uses $850m to kiss and make up with IBM

Well puckered

By Ashlee Vance, 1st July 2005

Customer Success Testimonial: Recovery is Everything

Microsoft and IBM can be friends again - or at least less bitter partners/rivals after Redmond agreed to hand over an $850m antitrust apology.

Microsoft will pay IBM $775m and dole out a $75m software credit. These gifts stem from Microsoft's antitrust trial in which IBM was deemed to have been unfairly punished by Microsoft's business practices. Critically, Judge Thomas Penfield Jackson found that Microsoft overcharged IBM for software and used unsavory, discriminating pricing tactics.

"With these antitrust issues behind us, both Microsoft and IBM can move ahead, at times cooperatively and at times competitively, to bring the best products and services to customers," said Brad Smith, general counsel at Microsoft. "Over the last few years we have been focused on resolving our disputes with other companies, and today's announcement takes another significant step towards achieving that goal."

Microsoft has coughed up more than $3bn to rivals such as Sun Microsystems, AOL and Gateway over various anticompetitive matters. The beef with IBM centered around the OS/2 operating system, SmartSuite productivity software and how Microsoft licensed Windows.

"IBM is pleased that we have amicably resolved these longstanding issues," the company said in a statement.

Now the two vendors can go back to less amicably competing over Java, Unix, and Linux while partnering to sell millions in Windows and Office licenses. ®

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