RealNetworks, CCIA Delight in Microsofts EU Loss

By Ryan Naraine  |  Posted 2004-12-22

RealNetworks, CCIA Delight in Microsofts EU Loss

Digital media firm RealNetworks Inc. reacted with glee to a European Union judges order that Microsoft Corp. immediately strip the Windows Media Player from its operating system in Europe, saying that compliance with the ruling is "a big victory for consumers."

In an interview with, RealNetworks deputy general counsel Dave Stewart said the ECs decision will effectively block any attempt by its biggest rival to delay implementation of crucial antitrust remedies.

"We believe that if Microsoft endeavors, in good faith, to comply with the Commissions decision, consumers will get an unbundled operating system that will be a fully functioning platform where third-party media players will offer the full range of media functionality," Stewart said.

Microsoft has already outlined plans to immediately disclose trade secrets and produce a version of Windows without WMP, a move that RealNetworks believes will go a long way toward leveling the playing field for others in the digital media distribution business.

Still, it is not entirely clear how the removal of WMP will affect the way competing media players work on the operating system. On a conference call Wednesday, Microsoft general counsel Brad Smith said the ECs order is very specific as it relates to the media player.

Microsoft may file an appeal with the European Court of Justice. Click here to read more.

"[W]hat it orders Microsoft to do—and specifically what it orders the company to do—is make available in Europe a version of Windows that has a number of files for the Media Player taken out of the product. Thats the only thing it requires us to do under the terms of the courts decision today and the Commissions decision from March. And so thats what were ordered to do, thats what we will do," Smith said.

Industry watchers believe that statement from Smith could have a direct impact on competing products, but RealNetworks remained unperturbed.

"I have not heard anything from Brads conference call but, based on the order, we expect things to work smoothly for Windows users who choose our player," RealNetworks Stewart said.

"Weve done our own independent testing and we have confirmed that if Microsoft properly unbundled Windows Media Player, the RealPlayer will still offer the full range of media functionalities to users. Third-party players will still be able to offer the full functionality, as per the Commissions order," Stewart added.

"The Windows operating system, as identified by the Commission, contains robust media infrastructure that other media players like RealPlayer can draw upon and use. We know the RealPlayer will perform the full range of digital media functionality that users want while running a computer with WMP removed," Stewart said.

Matt Rosoff, an analyst with Directions on Microsoft, made it clear the EU ruling only says that Microsoft must make a version of Windows without the WMP available to OEMs. "It doesnt say that OEMs have to ship it. I cant see any OEM shipping a product that results in more support calls," Rosoff said.

Click here to find out why Microsoft Watchs Mary Jo Foley thinks unbundling IE and Media Player could be a positive thing for Microsoft.

"The only way it would happen is if RealNetworks strikes an agreement with a particular OEM to ship the RealPlayer on all PCs in Europe," he said, casting doubts on RealNetworks financial ability to strike such deals.

Microsofts stripped-down operating system is expected to arrive in the retail channel in February and the company plans to unveil a Web site later on Wednesday to share communications protocols with competitors.

Next page: Reals antitrust lawsuit.

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Stewart said RealNetworks will play close attention to Microsofts compliance before making business decisions on the server side.

He also made it clear that Wednesdays news would have no bearing on RealNetworks antitrust lawsuit filed more than a year ago accusing Microsoft of illegally using its monopoly power to restrict competition and consumer choice in the digital-media space.

"Our lawsuit in the U.S. affects a broad range of predatory conduct. It deals with the bundling of the server with the operating system, predatory pricing and a broad range of exclusionary conduct," Stewart said.

Click here to read more about Reals antitrust lawsuit against Microsoft.

Microsofts recent moves to shell out billions of dollars to settle a range of antitrust and intellectual property lawsuits has prompted speculation that settlement talks with RealNetworks are on the agenda.

"Were continuing to pursue our case. We dont comment about any litigation or discussions beyond what is publicly available," he said.

The nonprofit Computer & Communications Industry Association, which received a financial incentive from Microsoft to pull out of the EU litigation against Microsoft, said Wednesdays order "could have a profound impact over time on the quality and choices available to consumers around the world."

"CCIA is pleased that the Court denied Microsofts request for a stay of the judgment. This is a huge vindication for the EU Commission, and particularly the Competition Directorate, and a victory for consumer choice," CCIA chief executive Ed Black said in a statement.

Black also defended the associations decision to pull out of the case. "While no longer a participant in the case, CCIA stands by its filings and submissions over the years and believes that CCIAs involvement played a major role in helping to achieve a ruling that meaningfully addresses a few of the competition problems resulting from Microsofts behavior," Black said.

"[Our withdrawal] was designed and timed so as to not undermine the strong case brought by Commission, and buttressed by CCIA and others in presentations to the Court. This ruling demonstrates both that our submissions and presentations were valuable and our withdrawal at the conclusion of the proceedings was, as intended, non-consequential," he added.

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