European antitrust regulators will investigate joint ownership of ContentGuard, having concluded a preliminary review, in order to assess concerns over competition.
A Commission spokesperson said preliminary review indicated the deal might create or strengthen a dominant position for Microsoft in the market for DRM solutions. The EC investigation will take-in concerns related to vertical integration of Microsoft in other markets.
The investigation follows a lengthy probe by European antitrust regulators into Microsoft’s bundling of Media Player with Windows and competitive practices in the server market.
That recently resulted in a record $611 million fine and requirements that Microsoft ship a version of Windows XP without Media Player and share APIs with others, after regulators concluded Microsoft had abused is dominant market position in Europe. Microsoft is appealing that particular ruling, and in the meantime the penalties have been suspended.
A spokesperson for Time Warner said yesterday: The parties are fully co-operating with the commission as this is a complex area. Microsoft was unavailable for comment.
The investigation was sparked following Time Warner’s announcement it had become a strategic investor in ContentGuard, a spinout from Xerox Parc. At the same time, Microsoft significantly expanded its own minority stake in ContentGuard to match Time Warner’s holding, while Xerox Parc became a minority investor.
ContentGuard is home to a number of DRM technologies to control distribution of digital media, including eXtensible Rights Markup Language (XrML), which is already used by Microsoft and whose patent is owned by ContentGuard Holdings Inc. XrML is an XML language for expressing rights associated with digital content.
Microsoft has been moving into DRM through Office and Windows, partly in an attempt to stop illegal distribution of its own software. However, the company is also courting Hollywood and the media industry, to lock-down distribution of film, music and other entertainment via Windows Media Player running on Windows PCs and available via MSN.
