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Microsoft is paying $775m to International Business Machines in the latest stage of its campaign to settle claims of anti-competitive behaviour.
The deal brings to about $4.5bn the total paid by Microsoft to settle private and class-action suits in the US. The largest software company has also paid a $600m fine to the European Commission.
IBM was among the personal computer companies found during the US government’s 1998 antitrust case against Microsoft to have been harmed by anti-competitive practices. The finding paved the way for the company to pursue claims against Microsoft. It did so privately, without filing a suit.
Earlier this year, Microsoft paid $150m to Gateway, another PC maker identified in the 1998 case, based on claims that the software group used its monopoly over PC operating systems to overcharge for software and squeeze out rivals.
While the IBM settlement resolves most of the legal claims between two of the largest US technology companies, they are expected to remain fierce rivals. IBM retains the right to pursue claims relating to its server hardware and software business, although it has agreed not to do so for at least two years.
Last year, Microsoft settled outstanding litigation with Sun Microsystems by paying $1.6bn and agreeing to co-operate closely with the troubled IT systems group. The deal with IBM does not include a technology alliance.
In addition to cash payments, Microsoft has agreed to give IBM $75m of free software. Microsoft has now settled the majority of claims arising from the 1998 antitrust case.
Still pending is a $1bn suit by RealNetworks, whose multimedia software is at the centre of action against Microsoft by the European Union. Also in the pipeline is a second suit filed by Novell, which in November settled a separate case with Microsoft for $536m. A further six class action law suits backed by US states remain outstanding.
In its most recent quarter, Microsoft took a $768m charge to cover the Gateway settlement and other legal costs.
The company said it would disclose its accounting treatment for the IBM settlement when it announced quarterly earnings on July 21.