Microsoft and IBM Resolve Antitrust Issues

REDMOND, Wash., and ARMONK, New York. — July 1, 2005 — Microsoft Corp. and IBM today announced that they have entered into an agreement to resolve antitrust issues between the two companies.

Today’s settlement resolves claims arising from the United States v. Microsoft antitrust case in the mid-1990s, where IBM was identified in U.S. District Judge Thomas Penfield Jackson’s findings of fact as having been impacted in its business by certain Microsoft practices. Under the agreement, Microsoft will pay IBM $775 million and extend $75 million in credit towards deployment of Microsoft software at IBM.

In addition to addressing all discriminatory pricing and overcharge claims based on the findings in the U.S. antitrust case, the settlement resolves all antitrust claims, including claims related to the IBM OS/2 operating system and SmartSuite products, with the exception of claims for harm to IBM’s server hardware and server software businesses. IBM has further agreed, subject to certain limitations, that it will not assert claims for server monetary damages for two years and will not seek to recover damages on such claims incurred prior to June 30, 2002. Microsoft also releases antitrust claims.

In November 2003, Microsoft and IBM entered into tolling agreements extending the statute of limitations on antitrust claims based on the U.S. antitrust case while exploring resolutions that would avoid protracted litigation. Microsoft’s and IBM’s tolling agreement was set to expire in July and the parties engaged in settlement discussions during the last two months.

“With these antitrust issues behind us, both Microsoft and IBM can move ahead, at times cooperatively and at times competitively, to bring the best products and services to customers,” said Brad Smith, general counsel and senior vice president, Microsoft. “Over the last few years we have been focused on resolving our disputes with other companies, and today’s announcement takes another significant step towards achieving that goal.”

“IBM is pleased that we have amicably resolved these long standing issues,” said Ed Lineen, senior vice president and general counsel, IBM.

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