Digital-media giant RealNetworks dropped a bombshell on Microsoft late Thursday, filing federal antitrust charges against the company. RealNetworks accused Microsoft of illegally using its Windows monopoly to limit consumer choices and restrict digital-media competition by bundling its Windows Media Player (WMP) technologies in the OS. RealNetworks said Microsoft has "pursued a broad course of predatory conduct over a period of years by abusing its monopoly power, resulting in substantial lost revenue and business for RealNetworks." The company said Microsoft has forced PC makers to restrict how they install competing media-player software, all the while forcing WMP on them.
"Our board has made a carefully considered business decision to take this action to end Microsoft's illegal conduct and recover substantial damages on behalf of our shareholders," Rob Glaser, chairman and CEO of RealNetworks and former Microsoft employee, said. "Despite Microsoft's tactics, RealNetworks has continued to innovate and diversify. Over the past five quarters, we've successfully grown our business as a whole by introducing exciting new products and services, and we're on track for our sixth straight quarter of revenue growth. However, we believe our business would be substantially larger today if Microsoft were playing by the rules."
RealNetworks noted that its antitrust lawsuit against Microsoft is "complementary" to the European Union (EU) antitrust investigation of the software giant--an investigation that also partially concerns WMP. RealNetworks says it will continue to support and cooperate with the EU investigation. Critics, however, wonder whether RealNetworks is hiding something. Despite logging millions of paid subscribers to its subscription services, RealNetworks made a point of discussing its financial troubles in the press release that announced the lawsuit. "Excluding the Microsoft litigation costs, RealNetworks expects a net loss per share for the fourth quarter to be in the range of $0.02 to $0.03 on revenue between $52 million and $56 million," stated the release. "RealNetworks expects to provide quarterly disclosure of the cost of this litigation." Jonathan Zuck, the president of the Association for Competitive Technology (ACT), a Microsoft-friendly trade group, said RealNetworks is taking advantage of an easy target. "I think RealNetworks is trying to hide its red ink by blaming its problems on Microsoft," Zuck told CNET. "The company learned from Sun and Netscape that if you have a tough quarterly report to put out, why not blame Microsoft?"