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IBM, Microsoft Settle Antitrust Claims – Postpone Others

Microsoft has agreed to pay IBM $775 million and to extend $75 million in software deployment credits in order to settle outstanding antitrust claims regarding the Redmond software giant’s competitive practices in desktop software markets during the 1990s.

The settlement resolves IBM’s claims regarding desktop software, including OS/2 and SmartSuite, but reserves IBM’s right to sue regarding server software and hardware at a later date – though with limits.

Justice Thomas Penfield Jackson’s findings of fact in the federal antitrust case against Microsoft in 1999 opened the door for legal action by IBM. Among Jackson’s findings: that IBM had been “impacted in its business by certain Microsoft practices,” the two companies said in a joint statement.

“IBM has further agreed, subject to certain limitations, that it will not assert claims for server monetary damages for two years and will not seek to recover damages on such claims incurred prior to June 30, 2002,” the statement said.

"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,” Brad Smith, Microsoft general counsel and senior vice president, said in a statement.

“IBM joins a growing list of settlees, including AOL and Sun, resolving claims directly related to Microsoft's U.S. antitrust case,” JupiterResearch senior analyst Joe Wilcox said on his Weblog.

“IBM is pleased that we have amicably resolved these long standing issues,” Ed Lineen, IBM senior vice president and general counsel, said in a statement.

However, that doesn’t mean that all public clashes between the two partners and competitors are over.

Wilcox pointed out that Big Blue has several good reasons for specifically exempting from the settlement claims regarding damage that Microsoft allegedly caused to IBM’s server business.

“For one, the European case isn't resolved, because of Microsoft's appeal [of the EU case and] for another, IBM is a fierce Microsoft competitor on servers, where Linux has its strongest traction,” Wilcox added.

About the Author

Stuart J. Johnston has covered technology, especially Microsoft, since February 1988 for InfoWorld, Computerworld, Information Week, and PC World, as well as for Enterprise Developer, XML & Web Services, and .NET magazines.

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