Real and Microsoft settle

SEATTLE — A broad settlement between digital media pioneer RealNetworks Inc. and its longtime foe Microsoft Corp. goes a lot further than simply ending the last major U.S. antitrust case against the tech heavyweight.

The deal also aims to help the two companies better compete against Apple Computer Inc. in the increasingly important business of online audio and video.

The settlement starts with a $460 million cash payment that settles all antitrust disputes worldwide that RealNetworks had against Microsoft.

RealNetworks also gets $301 million in cash and services — including promotion on Microsoft Web sites and the software giant's instant-messaging service — that are designed to help its products reach a wider audience.

"I'm eager to begin working together with the team at Microsoft," the company's chief executive, Rob Glaser, said during a joint appearance with his former boss and longtime nemesis, Microsoft Chairman Bill Gates.

The deal is the latest in a peace offensive Microsoft has launched in recent years, following an antitrust settlement with the U.S. Justice Department. The peacemaking has cost the cash-rich company several billion dollars but also led to better cooperation with some formerly bitter rivals.

In July, Microsoft reached an $850 million deal with International Business Machines Corp. That followed a $1.6 billion settlement with Sun Microsystems Inc. in 2004 and a $750 million truce with America Online, part of Time Warner Inc., in 2003.

Seattle-based RealNetworks sued Microsoft in December 2003, accusing it of illegally forcing Windows users to accept Microsoft's digital media player. RealNetworks said its player suffered as a result.

RealNetworks also had participated in European Union and Korean antitrust complaints against Microsoft, but withdraws from those cases as part of the agreement.

Founded by Glaser in 1994 after he quit Microsoft, Real was among the first companies to offer an online music player.

The company has for years been one of Microsoft's direct competitors in digital music and video but has increasingly struggled against its massive local rival.

Both companies also have found it exceptionally tough to compete against digital music's juggernaut: Apple's iPod digital music player and iTunes online music store and jukebox software.