Prometheus 6   

AOL Time Warner and Microsoft End a Bitter Rivalry
By STEVE LOHR and DAVID D. KIRKPATRICK

icrosoft agreed to pay AOL Time Warner $750 million in a legal settlement yesterday that ends one of the most bitter rivalries in modern corporate history and commits the two companies to a sweeping program of business cooperation.

Under the agreement, Microsoft will grant AOL a seven-year royalty-free license to its Internet browsing software, and faster and greater access to Microsoft's Windows operating system. That will make it easier for AOL's popular online service to work with Windows software, which runs more than 90 percent of all personal computers.

Microsoft will also grant AOL Time Warner a long-term license to its software for delivering music and video over the Internet. Microsoft vowed to work closely with AOL Time Warner to develop software to protect AOL's movie and music assets from piracy. The two companies also agreed to discuss how to open up their networks for sending and receiving instant messages over the Internet, although they have said similar things before.

The unexpected alliance between the corporate titans reflects a fundamental change in direction for both companies with the fading of the fad for convergence between technology and media companies.