RealNetworks sues Microsoft in antitrust case

19 Dec 2003

Microsoft has landed in the middle of another antitrust mess, this time with longtime streaming media nemesis RealNetworks, which is accusing the software giant of using its Windows monopoly to hurt digital media rivals.

The suit, filed in a San Jose court, alleges that Microsoft “pursued a broad course of predatory conduct over a period of years, resulting in substantial lost revenue and business for RealNetworks”.

The suit ads that Microsoft had “wielded its monopoly power to restrict how PC makers install competing media players while forcing every Windows user to take Microsoft’s Media Player whether they want it or not”.

According to reports, RealNetworks’ damages could exceed US$1bn in lost business and the company will seek an injunction preventing “further illegal conduct” by Microsoft.

Real charges that Microsoft tied its Windows Media Player to its Windows operating system, shutting out competitors like Real and achieving “virtually universal distribution.”

From October 2001 to March 2003, Real alleges that this activity ensured that Media Player was installed on 95pc of PCs shipped. In contrast, however, Real’s streaming media player was pre-installed on less than 2pc of the estimated 207m PCs shipped during the period.

Microsoft, however, has expressed suprise at the lawsuit; unusual after close on 10 years of antitrust actions ranging from having its Explorer browser pre-installed on PCs to federal actions over its monopoly in desktop operating systems.

In a statement yesterday on the RealNetworks lawsuit, Microsoft said: “RealNetworks’ legal action is unfortunate and particularly surprising given the intense competition in the digital media marketplace. The facts are clear. There is vibrant competition in this marketplace, and RealNetworks’ own reported growth shows that it has thrived on Microsoft Windows and many other operating system platforms. Computer manufacturers are free to install and promote any media player on new PCs. Consumers are free to use any media player, and many consumers use several different media players.

“It’s hard to reconcile Real’s own statements on its marketplace success with today’s [Thursday, 18 December] lawsuit. Real claims to be the No.1 provider of digital media solutions, with massive distribution of its software and more than 1m player downloads a week. Thus, this is a case where a leading firm is seeking to use the antitrust laws to protect and increase its marketplace share and to limit the competition it must face.

“These issues are a rehash of the same issues that have already been the subject of extensive litigation and a tough but fair resolution of the government antitrust lawsuit. The government antitrust ruling imposes a range of significant restrictions on Microsoft’s business and provides considerable new opportunities for companies like RealNetworks; we accept these new rules and we are committed to full compliance.

“Media playback technologies have been included in Windows as far back as the early 1990s. Microsoft has competed on the merits in the digital media marketplace by creating superior technology that delivers better quality, an open platform for software developers and device manufacturers and benefits to consumers. Companies are bringing new media players and services to the marketplace every week. That is what is going to benefit consumers and move this marketplace forward, and not this kind of rear-view-mirror litigation,” Microsoft stated.

By John Kennedy