Sun opts to settle with Microsoft for $1.6 billion

— 4:26 PM on April 2, 2004

One day removed from April Fool's Day, Sun Microsystems has decided to drop its longstanding antitrust suit against Microsoft and has chosen to settle to the tune of $1.6 billion.

Under the settlement, Microsoft will pay Sun $700 million to resolve antitrust issues and $900 million to resolve patent issues. In addition, the companies will pay royalties for use of each other's technology, with Microsoft making an up-front payment of $350 million. Sun is expected to make royalty payments to Microsoft when Microsoft technology is incorporated into its server products.
You can read Microsoft's official press release here. As part of the agreement, Sun will work with Microsoft to ensure that Java and its other products will integrate better with Microsoft's .Net and Windows operating systems.

Of course, the outlook is not all sunshine for Sun. Despite this windfall, Sun faces a cloudy future as outlined in this C|Net article. Apparently, they plan to cut 3,300 jobs, so Sun's stunning turnabout was surely motivated by economics.

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