Microsoft says it will pay $750 million to AOL Time Warner to settle a 16-month-long antitrust dispute as the rivals agreed to work together on Internet-based media and technology.
The wide-ranging deal marked the end of one of Microsoft's most contentious legal disputes following last November's federal antitrust settlement.
As part of the deal, AOL won a royalty-free license to use Microsoft's Internet Explorer browser technology for seven years. Microsoft will also distribute AOL's online service software discs with Windows that are shipped to the "white-box" personal computer manufacturers that make customised PCs from off-the-shelf components.
AOL had charged Microsoft with abusing its monopoly power against Netscape, a web browser AOL bought in 1999 when Microsoft's Internet Explorer was already overtaking it as the dominant browser.
The AOL antitrust lawsuit, filed in January 2002, called for monetary damages as well as for competition to be restored in the market for web browsers. Netscape pioneered a browser for mainstream users, which touched off the explosive growth of the Internet in the 1990s.
New York-based AOL Time Warner said it would use the settlement money to pay down part of its $26 billion in debt.
AOL Time Warner shares rose in after hours trade to $15.28 from the $14.85 close on the New York Stock Exchange. Microsoft stock eased to $24.28 from its Nasdaq close of $24.40.