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Real CEO says EU-Microsoft ruling ‘right,’ may help lawsuit

Apr 07, 20045 mins

With the sting of the European Commission’s antitrust ruling against Microsoft still fresh, RealNetworks head Rob Glaser appeared in London on Wednesday endorsing the Commission’s decision as more solid than the U.S. settlement, and predicting that it would aid his company’s private suit against the software giant.

“Our sense is that the Commission did the right thing for the right reasons,” Glaser told a handful of journalists at an event to launch international versions of the company’s RealPlayer 10 software.

The RealNetworks chairman and CEO said that the Commission’s decision was especially important to his company because it is the first time that an antitrust ruling has been made concerning media players, given that the U.S. case against Microsoft centered around browsers and Java.

Real hopes that the decision will add fuel to a private suit it lodged against Microsoft last year, after the U.S. government settled its antitrust battle with the Redmond, Wash., company, in an agreement that some competitors saw as merely a slap on the wrist.

“Our lawyers tell me that (the Commission’s ruling) will strengthen our private suit,” Glaser said.

Real’s U.S. suit accuses Microsoft of using its monopoly powers to control the digital media market by forcing PC makers to include its Windows Media Player, while at the same time placing restrictions on competing players like Real’s.

Many of the concerns brought up by the private suit were addressed in the Commission’s decision late last month, in which it ruled that Microsoft must offer versions of its ubiquitous Windows operating system (OS) without bundling its Windows Media Player, giving original equipment manufacturers a choice over which player to provide. It also laid down rules that Microsoft must disclose details of interfaces used by its products to communicate with Windows and levied a 497 million-euro ($601 million on Wednesday) fine.

And although in negotiations with the Commission Microsoft had offered to provide several different media players with its OS, Glaser believes that the Commission’s final decision was the right course to take.

“It’s much better to establish a legal precedent than to have one party craft a solution,” he said. “And we are already hearing from manufacturers that they welcome the opportunity to choose which player they want to include.”

The Commission’s ruling stands in contrast to the U.S. Department of Justice’s 2002 settlement with the software provider, which established restrictions to licensing agreements, orders Microsoft to release some of its intellectual property and forbids retaliation against PC vendors and software manufacturers that offer competing products.

At the time of the settlement some Microsoft rivals complained that U.S. regulators had not gone far enough. The Commission’s ruling has also faced criticism — not from Microsoft competitors, but from U.S. politicians who claim that antitrust rulings against U.S. companies should be made at home. The Justice Department’s antitrust chief has even come out against the decision, calling it “unfortunate.”

Glaser labelled the U.S. criticism of the Commission’s decision as “not trans-Atlantic politics, but sour grapes.”

“It’s an election year and politicians might well say things that appeal to the local crowd,” he said. In fact, he declared European antitrust rulings as more even-handed because the changing politics of one country do not affect decisions as much as they do in the U.S.

“In the U.S., the (antitrust) process was pre-empted by the Bush administration settling with Microsoft. A situation like that is unlikely to happen in Europe, with some 15, now 20 member states, resulting in the greater likelihood of good decisions happening consistently,” he said.

But despite RealNetworks’ antitrust concerns, the company appears to be doing well and is expected to return to profitability this year, Glaser said.

The company head was in London to launch international versions of the RealPlayer 10 software — which has been available in beta in North America since January — in German, English and Japanese. It’s due to be offered in French, Italian, Spanish, Korean, Portuguese and Chinese later this year. RealPlayer 10 supports all major media formats, including Windows Media, MPEG-4, MP3, and AAC (Advanced Audio Coding), a format used by Apple Computer’s iTunes, leading Real to dub it the “first universal player.”

Real has also just sewed up some European content and partnership deals. The company is providing technology to support BT Group’s new Rich Media platform, announced Tuesday, and the U.K.’s Virgin Radio has chosen to broadcast in RealAudio 10 with AAC online. Additionally, Real reached a deal late last year to provide coverage of the Union of European Football Associations Champions League.

Glaser pins his company’s post-Internet bubble success on the growth of broadband, and the strength of Real’s content and services business, which generate three-fourths of the company’s revenues.

“For us broadband has been transformational,” he said.

RealPlayer currently has 350 million unique registered users and 4 million of those are premium players, he said.

The company’s Rhapsody subscription music service is growing steadily in the U.S. and Real plans to launch it in Europe within the next two years, as soon as licensing agreements are set up and European users are more educated about the advantages of commercial services, Glaser added.

With the ink still drying on the Commission’s ruling and a new international media players out of the gate, Glaser appeared bullish on Real’s future.

“Our strategy has evolved and we are on track,” he said.