Microsoft Responds to Real Networks Suit

Again accused of abusing its monopoly power, Microsoft on Thursday defended the way it competes in the digital-media market as Real Networks girds for battle.

Faced with another private antitrust lawsuit, this time from digital media competitor Real Networks Inc., Microsoft Corp. late Thursday defended its business practices in the multimedia market.

"There is vibrant competition in this marketplace and Real Networks own reported growth shows that they have thrived on Windows and many other operating platforms," Microsoft said in a statement.

As previously reported, Real Networks earlier in the day filed an antitrust case against Microsoft in federal court in San Jose, Calif., alleging that the Redmond, Wash., software giant illegally used its monopoly power to restrict competition and consumer choice in the digital-media space by forcing its Windows Media player on Windows users.

Seattle-based Real Networks, in a statement, accused Microsoft of "predatory action over a period of years by abusing its monopoly power, resulting in substantial lost revenue and business for Real Networks."

Part of Real Networks case is based on business conduct similar to what U.S. courts have declared illegal in other Microsoft antitrust cases, such as failure to disclose interface information and placing restrictions on PC manufacturers, said Bob Kimball, Real Networks vice president and general counsel, in the statement.

Real Networks, which expects the litigation to cost $12 million in 2004 and $1.5 million in this quarter, is seeking both injunctive relief and damages that "could well exceed a billion dollars," Kimball said. Such antitrust litigation typically takes about three years with a trial, Real Networks said. Microsoft, for its part, said that computer makers can install and promote any media player on their PCs and that it does not restrict consumers from using any media player. The company called Real Networks move "rear-view mirror litigation."

"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," Microsoft said in the statement, in turn accusing Real Networks of using antitrust laws "to protect and increase its market share and limit the competition it must face."

Real Networks said its suit is complementary to the European Commissions ongoing antitrust investigation of Microsoft.

Attorneys who have been involved in other legal action against Microsoft said they could see Real Networks lawsuit coming given its involvement in advising the Department of Justice and the various states in their antitrust cases against Microsoft.

"Its not a surprise at all," said Richard Grossman, a partner at Townsend and Townsend and Crew LLP, in San Francisco, and co-lead counsel in a California class-action case that led to a $1.1 billion settlement with Microsoft. "Certainly Real Networks has been at the forefront of those concerned about Microsofts anti-competitive conduct."