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RealNetworks claims to be targeted by Microsoft as threat

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CIOL Bureau
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Peter Kaplan

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WASHINGTON: Internet video and audio pioneer RealNetworks Inc. accused

Microsoft Corp. in court on Wednesday of seeking to restrict its products

because they posed a threat to the software giant's Windows operating system

monopoly.

RealNetworks vice president David Richards, in written testimony to US

District Judge Colleen Kollar-Kotelly, said that as recently as August 2001 a

senior Microsoft executive had confirmed that RealNetworks was seen as a threat.

Richards central charge against Microsoft survived even though portions of

his testimony and exhibits were struck down by the judge who has repeatedly

cautioned the states for introducing new allegations of wrongdoing.

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Microsoft counterpunched during Richards' cross examination, seeking to show

that, despite its complaints, RealNetworks was still dominating media-playing

software.

RealNetworks alleges Microsoft withheld technical data from RealNetworks to

ensure that RealNetworks' audio and video player would not work as well with

Microsoft's Windows operating system as the Windows Media Player.

The RealNetworks executive was the third witness called by a group of nine

states seeking tougher sanctions against Microsoft for violations of antitrust

law. The states have rejected a proposed settlement of the nearly four-year-old

case reached in November with the US Justice Department and nine other states.

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Judge excludes material

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Before Richards could testify, Kollar-Kotelly agreed with a request from

Microsoft to reject some of his testimony and exhibits, which aimed to show that

Microsoft had forced computer makers to back away from agreements to install

RealNetworks media players in machines they sold.

She called parts of Richards' testimony "classic hearsay."

Included in the rejected material was an e-mail from June 16 of last year in

which AOL Time Warner Inc. executive Barry Schuler told RealNetworks executives

that Microsoft officials "want to kill you guys so badly , it is

ugly."

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The day of that memo, talks between Microsoft and AOL about shipping AOL with

the next version of Windows broke down. AOL said Microsoft wanted to scale back

support for the media player supplied by RealNetworks.

Another e-mail exhibit discarded by the judge suggested that computer maker

Gateway Inc. feared retaliation by Microsoft if it went ahead with a contract to

place RealNetworks software on Gateway machines, according to a source familiar

with the material.

"(T)hey will put us out of business," according to an e-mail

account about the 1999 contract negotiations exchanged between RealNetworks

executives, the source said. But most of Richards' 90 pages of testimony was

allowed.

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Seen as threat

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Richards said that in August of last year Microsoft Vice President Jim

Allchin informed RealNetworks that Microsoft believed its own rival product,

called Windows Media Player, was part of the Windows operating system and

RealNetworks was therefore a platform competitor.

"I do not think there is any question that Microsoft has sought, and

continues to seek, to restrict the distribution, promotion, use and

interpretability of RealNetworks," Richards wrote.

Windows XP contains a function, Richards said, that allows users of Windows

Media Player to easily copy songs on to a compact disc and search their files

for a song. But Microsoft's tactics prevented RealNetworks' media player from

offering the same functions, he said.

Microsoft attorney Richard Pepperman spent the afternoon questioning

Richards, looking to undermine RealNetworks claim to be the victim. Pepperman

displayed one e-mail from Richards in 2000, that tells a RealNetworks sales

executive the company's media player was "ubiquitous" and that 49 of

the 50 top broadcasters used the company's format for streaming media.

In the hearings, which are expected to last up to two months, the states are

trying to make a case for stronger remedies to stop Microsoft from spreading its

dominance to new technologies like media players, hand-held devices and

interactive television controllers.

The states are proposing that Microsoft sell a "modular" version of

Windows that would allow computer makers to strip out add-on features like the

Internet Explorer browser, or Microsoft's media player. They also would force

Microsoft to disclose more about its software and license its browser to other

companies royalty-free.

Microsoft is arguing that the remedies suggested by the dissenting states are

extreme and that any sanctions should be confined to specific findings upheld by

a federal appeals court.

The proposed settlement of the government case is designed to remedy the

antitrust violations by giving computer makers more freedom to feature rival

software on their products, among other things. Judge Kollar-Kotelly is

considering the proposed settlement under a separate proceeding.

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