Microsoft and RealNetworks on Tuesday announced a far-reaching deal putting their legal differences and instead buttressing their digital-music strategies, reports CNET. Microsoft will pay $460 million in cash to RealNetworks to settle antitrust claims, as well as $301 million to support Real's music and game efforts; it will also promote Real's Rhapsody subscription music service via MSN. Microsoft can earn credits toward that $301 million by signing up Real subscribers via MSN. In turn, Real would end its involvement in antitrust investigations against Microsoft, including in Europe and Korea. Both companies said the deal should help them to compete against Apple.

RealNetworks had alleged in its December 2003 lawsuit that Microsoft had abused its "monopoly power to restrict how PC makers install competing media players while forcing every Windows user to take Microsoft's media player, whether they want it or not." Real originally sought $1 billion in damages.

Real will have broad access to distribution via new computers. Real will also create a new game subscription service to be offered on MSN Games and will develop a series of new casual games for Xbox Live Arcade for Microsoft's Xbox 360.