WinInfo Daily UPDATE, April 15, 2004

Massachusetts Attacks Microsoft's Search Engine Plans Federal Settlement

Massachusetts, the lone state left standing among the so called "nonsettling states" from Microsoft's US antitrust trial, again raised concerns this week that the company is undeterred by its consent decree. In a scheduled filing with the US District Court for the District of Columbia this week, Massachusetts Attorney General Tom Reilly said that Microsoft's November 2002 consent decree with the US government hasn't restored competition and isn't working. He also noted that the state is continuing its investigation into Microsoft's search engine plans in a bid to stop the company from killing Google as it has countless other competitors including Netscape in the late 1990s.

This lack of competition is perhaps most disturbing in the Communications Protocol arena because this aspect of the remedy was supposed to unfetter competition by nurturing development of competitive server products Reilly wrote in the filing. It appears that the competitive impact of the decree in this key area is essentially nonexistent.

In addition, Reilly discussed his concern that Microsoft will again bundle features with a future major Windows release specifically to curtail competition in upcoming new markets. In this case, he's concerned about issues regarding Internet search engines, document format, programs, and other functionalities that Microsoft allegedly plans to incorporate into the next version of its Windows operating system.

In related news, this week federal regulators asked Microsoft to disclose more information to competitors that license software code from the company under the provision of the consent decree that Reilly complained about. According to US Department of Justice (DOJ) regulators, competitors that have signed up to get technical information from Microsoft haven't received enough documentation to put that information to good use and other companies have refused to sign up as a result. We have concluded that the technical documentation needs substantial revision in order to ensure that is usable by licensees, a DOJ report issued this week stated. Microsoft pledged to work with regulators to ensure that competitors get enough documentation.

RealNetworks Seeks Apple Alliance

According to documentation leaked to The New York Times, RealNetworks Chairman and CEO, Rob Glaser, recently sent an email ultimatum to Apple Computer CEO Steve Jobs. Join a tactical alliance with RealNetworks or we're moving to Microsoft technology. The email message, which Glaser allegedly sent April 9, portrays a seemingly desperate man who apparently realizes that upcoming Microsoft audio technology will help Windows based music services plow aside competition from Apple and other companies that don't offer subscription based services. The Apple iTunes Music Store, although extremely popular, is currently a financial wash for the company because record company executives demand a high percentage of each sale and Apple has to foot the store's architectural costs.

We are seeing very interesting opportunities to switch to Microsoft's Windows Media Audio (WMA) format Glaser's email stated. Instinctively, I don't want to do it because I think it leads to all kinds of complexities in terms of giving Microsoft too much long term market momentum. What are these opportunities you might ask? As I wrote in a Connected Home Media article this week Microsoft will soon offer its music partners new WMA based technology that will let consumers fill portable audio players with music acquired through a subscription rather than purchased music So for a 10 to 20 monthly fee consumers will be able to subscribe to services from Napster Virgin Music and other companies and download 5GB to 60GB of music each month to portable devices. Filling an Apple iPod or other device with purchased music would cost several thousand dollars more per year.

People who know Jobs say that Apple probably won't reverse its proprietary strategy and join RealNetworks in an "us against the world" standoff against the WMA compliant online music world. For his part, Glaser says he's surprised that the email message leaked. He describes the message as reaching out to Jobs before Glaser switches camps to WMA. "Why is Steve afraid of opening up the iPod?" Glaser asked. "Steve is showing a high level of fear that I don't understand."

Expect Glaser's email message to fall on deaf ears. Aside from Jobs's hubris and inability to see the big picture, Glaser isn't helping his cause by repeatedly berating Apple for not opening up its iTunes Music Store iPod and Protected Advanced Audio Coding (AAC) format. When Glaser was in England recently to push his company's new RealPlayer 10 software he again chastised Apple for following the same unworkable strategy with digital music that the company pursued with the Macintosh, which has fallen to record low usage and market share numbers under Jobs.

TAGS: Windows 8
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