RealNetworks sued in 2003, accusing Microsoft of
illegally using its monopoly power to restrict competition in the
field of digital media. In particular, said the company, Microsoft
was able to restrict how PC makers installed rival media players,
such as RealNetworks’ RealPlayer, while forcing every Windows user
to take Microsoft’s media player, whether they wanted it or
not.
In addition to direct action, RealNetworks was one of the
companies involved in the European Commission’s investigation into
Microsoft, and is participating in the ongoing antitrust
investigation into Microsoft by South Korean regulators.
As part of the settlement deal announced yesterday, RealNetworks
will abandon its antitrust claims in the US and will stop
participating in the European Commission and South Korean
actions.
The settlement is made up of three agreements, which will net
RealNetworks around $761 million.
The first of these resolves all the companies’ antitrust
disputes worldwide, on the basis of a $460 million cash payment by
Microsoft, and a series of technology licenses and commitments
under which RealNetworks will obtain long-term access to important
Windows Media technologies.
The second provides for collaboration on digital music,
including the promotional and marketing support of RealNetworks'
digital music subscription service, Rhapsody, on MSN properties,
while the third agreement provides that Microsoft will offer
RealNetworks’ digital games through MSN Games and Xbox Live Arcade
for Xbox 360.
Microsoft is scheduled to pay RealNetworks $301 million in cash
in respect of these music and games agreements, and will provide
services over 18 months in support of RealNetworks' product
development, distribution, and promotional activities. The $301
million will reduce, however, by the amount of an undisclosed
credit to be applied each time MSN delivers a subscriber to
RealNetworks.
In addition, RealNetworks will take steps to support MSN Search,
while both firms will jointly promote use of Windows Media
technologies with Rhapsody to Go.
“Today we’re closing one chapter and opening a new one in our
relationship with Microsoft,” said Rob Glaser, Founder and CEO of
RealNetworks.
According to Brad Smith, senior vice president and general
counsel at Microsoft, “This agreement ensures that Microsoft can
innovate and that other media players can compete in a broad
marketplace.”
“We’ve resolved our disagreements from the past and put in place
a foundation for collaboration in the future,” he added.
The settlement is the latest in a series of agreements designed
to reduce Microsoft’s backlog of antitrust disputes, dating back to
the software giant’s 2002 settlement with the US Justice
Department.
Most recently Microsoft agreed to pay IBM $775 million to settle
antitrust claims, while Novell and the Computer &
Communications Industry Association settled their claims in
November last year.
