Microsoft loses antitrust case
BOSTON — IBM Corp. will get $775 million in cash and $75 million worth of software from Microsoft Corp. to settle claims still lingering from the federal government’s antitrust case against Microsoft in the 1990s, the companies announced Friday.
The payout is one of the largest that Microsoft has made to settle an antitrust-related case. And it brings the software giant closer to moving on from claims involving technologies long since eclipsed.
IBM was pressing for restitution for the “discriminatory treatment” that U.S. District Judge Thomas Penfield Jackson cited when he ruled in 2000 that Microsoft had broken antitrust law.
IBM and Microsoft once had a trailblazing collaborative relationship, dating to Big Blue’s historic decision in 1981 to have Microsoft write software for the original IBM PCs.
Later, IBM and Microsoft would jointly create the OS/2 operating system. But the partnership soured, and Microsoft eventually focused on Windows and left OS/2 development to IBM.
In the mid-1990s, IBM irked Microsoft by selling PCs that were loaded with OS/2 as an alternative to Windows and with its SmartSuite productivity software, a rival for Microsoft Office programs.
Jackson noted that Microsoft retaliated by charging IBM more than other PC makers for copies of Windows.
There were other tactics. Months before Windows 95 came out, Microsoft let other PC companies pre-install the operating system on new computers that could go on sale right after the launch. But IBM got its license only 15 minutes before the event.
As a result, many customers eager for the latest software opted for machines made by IBM’s rivals. Since Windows 95 arrived in August, IBM missed out on back-to-school sales and lost “substantial revenue,” Jackson wrote.
IBM didn’t sue Microsoft over the findings, but kept the right to do so under a 2003 agreement between the companies. Similar talks led to a $150 million settlement with Gateway Inc. in April.
Separately, Microsoft has spent more than $3 billion in recent years settling lawsuits by rivals, including a $1.6 billion deal with Sun Microsystems Inc. in 2004 and a $750 million truce with America Online, part of Time Warner Inc., in 2003.
Redmond, Wash.-based Microsoft still faces legal challenges, including a lawsuit by RealNetworks Inc. and an appeal of a $600 million antitrust ruling by European regulators. Though software maker Novell Inc. reached a $536 million settlement with Microsoft in November, Novell got a judge’s approval last month to proceed with a separate antitrust suit over the WordPerfect word-processing program.