RealNetworks: Microsoft playing unfair

Washington, D.C. - At a U.S. Senate Judiciary committee hearing yesterday called to investigate Microsoft Corp.'s business practices, a small software company demonstrated what some lawmakers present said was an example of Microsoft's unfair business practices.

Robert Glaser, chairman and CEO of RealNetworks, Inc., which has been a pioneer in streaming media, demonstrated how installing Microsoft's new Windows Media Player "broke" the widely-used RealPlayer software.

After downloading Media Player and installing it on a system already equipped with the RealNetworks' RealPlayer, attempts to use RealPlayer failed and an error message was displayed. The error message is fairly brief, and just reads "Can not play back file. The format is not supported." This fails to give users any information about how to remedy the situation and make RealPlayer function again, Glaser said.

Glaser, who spent 10 years at Microsoft as a vice president for multimedia and consumer systems but left five years ago, said he was extremely reluctant to testify before the committee, but that unless the actions taken by Microsoft are remedied, the computing world will be "less friendly, less useful to customers, and will slow down technical innovation."

Asked by one of the senators on the panel why he had come to testify, Glaser replied, "I would like nothing more in this case than voluntary restraint on the part of Microsoft and anybody else in the market with that kind of power."

Glaser testified at the behest of Sen. Orrin Hatch (R-Utah), who said he has received numerous complaints from other companies similar to the one outlined by Glaser. Hatch said that most of the others are afraid to come before the committee and testify.

The new incompatibility demonstrated between the two applications "certainly appears to be a rather anticompetitive use of Microsoft's dominance. From what I've been reading, it may not be isolated," said Hatch. He also called it "the sort of practice that impedes innovation."

Other senators on the panel agreed with Hatch's assessment, saying that the U.S. Department of Justice should look into the situation described by Glaser and perhaps add the allegation to the antitrust case already filed against Microsoft.

Glaser said he had been in discussions with Microsoft on and off since May to try to resolve the problem. Microsoft owns a 10% stake in RealNetworks and Windows Media Player is partly based on technology licensed from the smaller company, Glaser said.

In early June, Glaser said, he had an e-mail exchange with Microsoft Chairman and CEO Bill Gates in which he said he'd been asked by Hatch to testify, and requested a meeting with Gates to discuss the issue. Gates declined, saying he wasn't familiar with the business relationship between the two companies, but advised Glaser to visit the Smithsonian and National Gallery while he was in Washington.

Glaser said it was with "a great personal sadness" that he had to report that Microsoft is beginning to inject other factors into the dynamic between the two companies, using its market power to unfairly impair free competition.

While Microsoft declined an invitation to testify before the hearing, its spokesman Greg Shaw was present and told a reporter that Glaser's demonstration was "somewhat of a misleading stunt."

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