Microsoft, Kodak settle XP dispute

Microsoft and Kodak have reached a settlement that could take some political pressure off the software maker and its plans to launch the Windows XP operating system.

Kodak had accused Microsoft of unfairly designing Windows XP in the way it handles digital photos. The photo products maker said Windows XP limited consumer choice in the default application for manipulating photos and steered consumers to Microsoft's preferred online photo processors.

The CEOs for the two companies--Steve Ballmer from Microsoft and Daniel Carp of Kodak--resolved many of their major differences last week, although some issues remain, sources close to the companies said.

Kodak's criticism appears to have been quelled by Microsoft changing one dialog box affecting how Windows XP handles imaging devices, such as digital cameras and scanners. Kodak agreed that its software would not automatically become the default for any digital camera attached to a PC--including competitors'--and to publicly support Windows XP.

Kodak also plans to pull back some of the pressure it placed on Charles Schumer, a Democratic senator from New York, to question whether Windows XP's photo features are anticompetitive. The companies are expected to announce the resolution of their differences Monday.

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Source: CNet