Microsoft said late today that it had reached a settlement with Google and ex-employee Kai-Fu Lee.

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SEATTLE — Microsoft Corp. said late Thursday it had reached a settlement with rival Google Inc. and former employee Kai-Fu Lee, ending a legal battle that had exposed behind-the-scenes rancor between the companies.

In a statement, Redmond-based Microsoft said the three parties had entered into a “private agreement that resolves all issues to their mutual satisfaction.”

Google confirmed the settlement and released a statement from Lee saying he was “pleased with the terms of the settlement agreement.”

Microsoft spokesman Jack Evans would not say when the settlement was reached. He also would not provide details of the settlement, calling it confidential. Google also declined to comment further.

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Lee had worked at Microsoft since 2000 and helped develop its MSN Internet search technology, including desktop search software rivaling Google’s. He left in July to lead Google’s expansion into China after Google offered him a $10 million compensation package.

Microsoft sued Lee and Google in a Washington state court, contending that Lee’s job at Google would violate terms of the noncompete agreement that prohibits him from doing similar work for a rival for one year. Microsoft also accused Lee of using insider information to get his job at Google, based in Mountain View, Calif.

Google responded with its own lawsuit against Microsoft in U.S. District Court in San Jose, Calif.

Because of the settlement’s confidential terms, it’s unclear what tasks Lee can perform until his noncompete agreement runs out.
A Washington state judge ruled in September that Lee could not work on products, services or projects he worked on at Microsoft, including computer search technology, pending the trial. But the judge said Lee could recruit and staff a Google center in China.

The case has shed light on bitterness between software titan Microsoft and search engine king Google, two high-tech powerhouses who seem increasingly to be edging into one another’s turf.

Court documents released in September said that Microsoft CEO Steve Ballmer, in an obscenity-laced tirade over another former employee’s having been hired away by Google, threw a chair and vowed to “kill” Google. Ballmer has called the characterization of his response a “gross exaggeration.”

Also last fall, Microsoft released an internal e-mail from a Google executive that suggested the search-engine company pursue Lee, then still a Microsoft executive, “like wolves.”

Microsoft had offered to settle in September, hours after the state judge ruled that Lee could do limited work for Google pending a full trial. That trial was set for next month.

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AP Business Writer Michael Liedtke in San Francisco contributed to this story.