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12.19.2003
Originally featured on BroadcastEngineering.com
RealNetworks sues Microsoft for $1 billion; Charges illegal practices involving Windows Media Player

RealNetworks, whose pioneering introduction of RealAudio at NAB 1995 launched the streaming media era, has filed a $1 billion lawsuit against Microsoft Corp. for illegally monopolizing online video and digital music.

RealNetworks charged that Microsoft illegally tied its Windows Media Player software with copies of its Windows computer operating system, whether Windows users want Microsoft’s player or not.

Filed in U.S. District Court in San Jose, Calif., the suit says Microsoft has violated state and federal antitrust laws, sold software at a loss to boost market share, and exploited its monopoly to restrict competition. These practices, the suit charges, make it harder for RealNetwork’s own Real One software to compete, “resulting in substantial lost revenue and business for RealNetworks.”

In recent months, Microsoft has also aggressively marketed its Windows Media 9 technology to American broadcasters. Many are fearful, however, of letting the computer maker gain a foothold in the broadcast industry due to its reputation for monopolistic practices and overly aggressive tactics against competitors.

Legal experts told the New York Times that the RealNetworks lawsuit cites new evidence suggesting that Microsoft’s business practices have remained unchanged after its landmark court battle with the federal government last year. They also said Microsoft’s legal woes are not necessarily over despite the company’s accommodation with the Bush administration and its settlement of several other lawsuits.

The state of Massachusetts continues to appeal the government’s antitrust settlement approved by a federal judge. The U.S. Justice Department, Massachusetts, and 18 other states had sued over Microsoft’s use of the Windows operating system to muscle out rivals.

The new lawsuit also highlights the legal difficulties Microsoft faces with European antitrust regulators. The software giant has been in negotiations with the European Union in recent months over its decision to bundle its Windows Media Player as part of the Windows operating system.

The lawsuit alleges that Microsoft, which builds the Windows operating system that controls more than 90 percent of personal computers, “bullies” PC makers into installing its media player instead of rivals.’ The company puts restrictions in its contracts so that PC makers that want to include Windows must also include media players and other software, the lawsuit said.

Microsoft called the lawsuit “unfortunate” and contended there is “vibrant competition” in the market. “Real Networks’ own reported growth shows that they have thrived on Windows and many other operating system platforms,” Microsoft said in an e-mail to reporters.

While Microsoft clearly won the browser wars with Netscape that prompted the government’s original antitrust case, the new lawsuit represents an effort by RealNetworks to avoid a similar fate in the market for software used to play music and watch videos on computers and hand-held devices.

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