Microsoft is paying £418m and handing over £43m in free software to IBM in a bid to settle anti-trust issues.
The settlement arises from the Department of Justice anti-trust case against Microsoft, in which US district judge Thomas Penfield Jackson found that unfair Microsoft trading practices had impacted on IBM’s business.
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In addition to addressing all discriminatory pricing and overcharging claims based on the findings in the US anti-trust case, the settlement resolves all anti-trust claims from IBM related to its OS/2 operating system and SmartSuite products.
But the settlement does not include claims from IBM that its server hardware and server software businesses were affected.
IBM has agreed not to assert claims for server monetary damages for two years, and will not seek to recover damages on such claims incurred prior to 30 June 2002.
David Bradshaw, analyst at OvumHolway, said: “It seems that Microsoft has decided it is going to be better in the long run to pay out some cash now to get a huge swathe of legal actions against it out of the way.”
Last year Microsoft reached a $1.95bn settlement with Sun. There have also been smaller but still significant settlements with Time Warner, Novell and Gateway.
“The whole issue of Microsoft's conduct over OS/2 remains confusing. In retrospect, it seems obviously wrong for Microsoft to have taken on the development of OS/2 for IBM while at the same time developing its rival Windows operating system. Both companies should have realised this at the time,” said Bradshaw.