Microsoft Corp. will pay IBM Corp. US$775 million and give it another $75 million in credit under an antitrust settlement announced by the two companies Friday.

The settlement resolves all discriminatory pricing and overcharging claims stemming from the U.S. government's mid-1990s antitrust case against Microsoft, the companies said in a press release. The settlement also resolves most other IBM antitrust claims, including those related to its OS/2 operating system and SmartSuite products. IBM's claims of harm to its server hardware and server software businesses are not covered by the settlement, however.

The settlement resolves claims arising from the U.S. government's antitrust case against Microsoft, in which U.S. District Judge Thomas Penfield Jackson found that IBM was hurt by Microsoft antitrust practices.

Both companies said they were pleased by the settlement. With the agreement, the two companies "move ahead, at times cooperatively and at times competitively," Brad Smith, Microsoft's general counsel and senior vice president, said in a statement.

As part of the settlement, Microsoft will extend $75 million in credit toward deployment of Microsoft software at IBM. IBM will not make claims for server monetary damages for two years and will not try to recover damages on server claims made before June 30, 2002.

The settlement in the U.S. government's antitrust case against Microsoft was approved in 2002; Microsoft currently is in the process of appealing last year's antitrust ruling in the E.U.'s case against the company.

IDG News Service

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