Microsoft, Time Warner AOL join forces to bolster online digital media
By Rick Merritt -- EE Times -- May 29, 2003 (5:27 p.m. ET)
SAN MATEO, Calif. — In a broad agreement announced Thursday (May 29), Microsoft Corp. and Time Warner AOL essentially decided to bury the hatchet on their browser and online services wars of the past to focus on breaking the logjam holding back digital music and movies on the Internet.
Microsoft will pay Time Warner AOL $750 million to settle an outstanding antitrust suit brought by Time Warner's Netscape division. In turn, Microsoft has granted the content provider a license to its Windows Media 9 technology and its next-generation digital rights management software.
Perhaps most significantly, the two companies have agreed to work together on various technical and marketing fronts to accelerate the move to online digital music and video services. The technical cooperation appears to center around developing interoperable DRM technologies for both analog and digital content, something Microsoft hopes to build into its next generation of Windows, dubbed Longhorn.
At its Windows Hardware Engineering Conference in early May, Microsoft said it aims to make Longhorn capable of reading any DRM software and "trans-encrypt" its policies as needed so the content could be viewed or played on any permitted networked device. "There are technical and legal issues we are exploring," to allow sharing copy-protected content on a home net, said Jason Flaks, a technical evangelist in Microsoft's eHome division.
In announcing the deal, Bill Gates, Microsoft's chairman and chief software architect said, "I spent some time talking with Dick Parsons, CEO of AOL Time Warner, and we discussed that there are many areas we compete in, which is quite healthy. There's also areas we need to cooperate in, including creating new access for digital media on the Internet. It's in the spirit of looking forward, and driving that cooperation in the best way possible, that we reached the new agreement."
The two companies have also agreed to collaborate on areas of public policy and legal action around online digital media as well as building consumer awareness for respecting intellectual property rights.
The deal marks one of the first high-profile agreements between a major computer-industry company and a content provider toward breaking the longstanding bottleneck on digital media that reared its head with the firestorm of controversy around Napster.
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