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Last Updated: Friday, 23 December 2005, 15:25 GMT
Google and Microsoft settle row
Microsoft services in China
Microsoft and Google are locking horns in China
Google has reached an out-of-court settlement with Microsoft after the two companies clashed over a controversial appointment in China.

Microsoft sued Google, claiming it had violated non-competition agreements after its hiring of Kai-fu Lee to head its research operation in China.

Dr Lee had previously set up Microsoft's research and development centre in Beijing.

The firms are vying to be big players in China's fast-growing online market.

Mutually satisfied

Microsoft's case was due to go to trial next month.

I am pleased with the terms of the settlement agreement
Dr Kai-fu Lee, Google

Microsoft argued that Dr Lee's appointment - seen as important in speeding up Google's Chinese expansion - violated his contract.

It claimed Google could gain access to confidential information as a result. Google said it had done nothing wrong under California law and responded by suing Microsoft.

Microsoft tried to block Dr Lee's appointment, but a US court ruled he could join Google as long as he did not hire Microsoft staff or work on similar projects with his new employer.

During the September hearing, Dr Lee said he had joined Google because he was frustrated by Microsoft's rate of progress in China.

The terms of the settlement were not disclosed, although all parties declared themselves satisfied with it.

Google said it was "pleased" with the settlement, while Microsoft said it had resolved all outstanding issues to "their mutual satisfaction".

"I am pleased with the terms of the settlement agreement," said Dr Lee, now responsible for engineering, product development and public affairs at Google's Chinese business.

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