Microsoft, AOL Time Warner Kiss And Make Up

"The basic rights management technology we have here actually has applicability in the consumer space where it has a lot of visibility--the question of ... balancing ease of use in digital media with making sure creative people get their appropriate license," he said. "But it's also an interesting use of [technology] when you're dealing with business documents and e-mail, controlling the usage of that information as well ... and Microsoft is putting that out as part of the Windows platform, what we call rights management."

Gates added that Microsoft's digital rights technology will be of particular interest to companies that are looking to build solutions.

The $750 million payout puts an end to an 18-month-old private lawsuit AOL filed charging Microsoft used anticompetitive practices aimed at decimating Netscape Navigator browser market share.

AOL purchased Netscape and its browser for $4.2 billion in November 1998. Navigator basically launched and then dominated the graphical browser market only to be supplanted by Microsoft's Internet Explorer.

Netscape and then AOL executives charged that Microsoft, among other things, spent billions on a product that it then turned around and offered for free to users in its quest to unseat Netscape.

As part of the deal, the companies pledged to work together to accelerate adoption of digital media distribution and security. AOL also gets a royalty-free seven-year license for Microsoft browsing technology, raising immediate questions about the future of Netscape's browser code.

In an internal memo to employees obtained by CRN, AOL Time Warner Chairman Richard Parsons said, "This agreement allows us to use Microsoft's Windows Media technology in our distribution of digital content, such as music and movies. Moreover, it provides that Microsoft and AOL Time Warner will work together on a series of long-term initiatives to stem digital piracy and support more rapid development of digital content to consumers."

In a joint teleconference with Gates, Parsons said the company will continue to support both browsers and that AOL would continue to work with Real Networks, which competes with Microsoft on streaming media.

As for another outstanding issue, Gates said the companies would continue to talk about resolving issues that prevent AOL Instant Messenger users from talking to their Microsoft counterparts but said "no time frame is set for that."

Steve Palange, president and CEO of TLIC Worldwide, a Boston-based solution provider, said the settlement could open up opportunities in digital rights management technology "when e-commerce comes back."

The fact that Microsoft paid to settle with AOL is surprising, but Microsoft's agreement to allow AOL to use its browsing technology clearly serves Microsoft's interests, he said.

Both companies said the key to future success is expanding broadband access and providing a secure way to disseminate all sorts of content.

"We haven't got our arms around the piracy issue," Parsons said. "Working cooperatively, [we can] begin to make a real positive statement ... in creating a world where content can be distributed digitally to consumers."

While most rights management focus has, in fact, centered on consumer applications--for example, the downloading of music files--VARs agreed with Gates' contention that there is huge applicability in business applications.

Digital rights management systems will enable solution providers to set up systems that "time out" documents when they expire, for example.