AOL Time Warner is to cooperate with Microsoft in developing online digital media after the pair resolved a longstanding competition row.

Microsoft is paying $750 million (€634m; £456m) to settle an AOL TW lawsuit accusing the software colossus of abusing its market dominance to crush rivals.

In particular, the media mammoth claimed Microsoft underwrote the success of its Internet Explorer browser at the expense of Netscape Communications (now owned by AOL TW) through the use of anti-competitive business practices such as deals with computer manufacturers.

On top of the cash, the settlement hands AOL TW a royalty-free licence for Microsoft browsing technology lasting seven years, plus access to technical details allowing the media firm’s products to run efficiently on the Windows operating system.

Now the dispute is over, the two will work together to produce high-quality digital media.

“While our companies will continue to compete,” said Microsoft chairman Bill Gates, “I'm pleased that we’ve been able to resolve our prior dispute and I’m excited about the opportunity to work together collaboratively to make the digital decade a reality.”

Data sourced from: BBC Online Business News (UK); additional content by WARC staff