Microsoft ( MSFT) and Google ( GOOG) shared some holiday cheer Thursday as they settled their litigation over former Microsoft executive Kai-fu Lee jumping ship to join Google.

In a tersely worded announcement, Microsoft said it has reached an agreement with rival Google and Lee settling the suit. The terms of the agreement are confidential, and all parties agreed to make no other statements to the media regarding it.

Microsoft would only say that "We are pleased with the terms of our settlement with Google and Dr. Lee." Google did not release a statement on the settlement and a spokesperson was not immediately available for comment.

Microsoft sued Google after Google announced in July that it was hiring Lee to head a new China research center. Google then countersued.

The suit highlighted the bitter rivalry between Microsoft, the world's largest software maker, and Internet darling Google. During the proceedings, another Microsoft senior engineer told of Microsoft CEO Steve Ballmer throwing a chair and vowing to "kill Google."

While Microsoft's sales have slowed and its stock has languished, Google has been basking in the glory of a skyrocketing stock price and soaring sales growth. Most recently, the foes competed fiercely for the search business of AOL, with Google ultimately emerging as the victor.

Shares of Microsoft closed down 14 cents, or 0.5%, at $26.59 and fell 2 more cents in recent after-hours trading. Google shares climbed $5.71, or 1.3%, to close at $432.04; shares gained 26 cents, or 0.1%, to $432.30 in recent after-hours trading.