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Microsoft and Barnes & Noble Team Up on E-Books

Barnes & Noble is getting a $300 million boost from Microsoft for its Nook business, which could help the two take on the Amazon and Apple behemoths. Microsoft's investment will buy them a 17.6-percent stake in the vaguely defined unit of Barnes & Noble's company that "will accelerate the transition to e-reading, which is revolutionizing the way people consume, create, share and enjoy digital content," according to a statement from the company. Also part of the deal, Barnes & Noble will get an app on the Windows 8 operating system.

This agreement may end a patent dispute between B&N and Microsoft, and it may open the door for the bookseller to spin off its Nook business into a separate entity. There's no word on whether this means Kindle will be left off the official Windows 8 OS release, but the Windows 8 public review of the OS did feature a Kindle app. It is also unknown as to whether Barnes & Noble will abandon the Android OS currently found on its Nook Tablet, Nook Color and Nook Simple Touch.

The announcement comes just weeks after announcing a new e-reader, the $139 Barnes & Noble Nook Simple Touch with GlowLight, and weeks after the U.S. Justice Department filed suit against Apple and publishers for e-book price fixing. 

In February, Barnes & Noble its digital business reported a loss, before interest, taxes, depreciation and amortization, of $93.7 million in its Q3, widening from a loss of $50.5 million a year earlier. The loss was attributed to aggressive holiday advertising costs.

Microsoft launched its own e-book software in 2000 called Microsoft Reader, but its library of content was never competitive. And it's been reported that the company will discontinue the service on August 30th.