Internal Documents Surface in Microsoft/EU Antitrust Case

In the first day of Microsoft's appeal of its European Union (EU) antitrust ruling, European Commission (EC) lawyers produced internal Microsoft email messages detailing what the EC says is illegal activity. The messages describe an attempt by Microsoft to crush media-player competitor RealNetworks the same way that Microsoft previously destroyed browser rival Netscape.

"RealNetworks is like Netscape," a 1997 email from a Microsoft executive reads. "The only difference is we have a chance to start this battle earlier in the game." What's striking about this exchange is that it took place on June 5, 1997, about four years before Microsoft was found to have violated US antitrust laws because of the illegal business practices it employed against Netscape. At the time, Microsoft's then-CEO Bill Gates was quoted as saying that the streaming media market "is a strategic area and we need to win it."

Lawyers for an anti-Microsoft trade group called the European Committee for Interoperable Systems (ECIS) also produced a 1999 Microsoft memo in which the company decided to "change the rules" of the competition with RealNetworks because Microsoft was falling behind. "Reposition [the] streaming media battle from Netscape vs. Real to Windows vs. Real," the memo reads, alluding to the strategy Microsoft used earlier to defeat Netscape.

Microsoft tried to use Apple's success with the iPod and iTunes as proof that competition has flourished since Microsoft bundled its Windows Media Player (WMP) with Windows, but EC lawyers noted that iTunes doesn't actually compete head-to-head with WMP. Instead, iTunes focuses almost exclusively on paid digital downloads, not on streaming media. "The fact that Apple moved away from competing with Microsoft head-to-head into the music service business doesn't contradict foreclosure; it confirms it," EC lawyer Per Hellstrom said. He also disputed Microsoft's citing of Adobe Macromedia Flash Player as WMP competition. Flash, Hellstrom said, isn't a full-featured media player. "It is, in fact, [also] bundled with Windows XP."