RealTime IT News

EU Probes DRM Deal

The European Commission is investigating the proposed acquisition of DRM technology provider ContentGuard by Microsoft and Time Warner. The last time the commission looked into Redmond's doings, it cost the software vendor $613 million.

After Microsoft and Time Warner announced plans to increase their holdings in ContentGuard in April, they asked for the EU's blessing on the deal under the European Union's Merger Regulation.

After a routine review of the July 12 request, the commission today said it had opened an in-depth probe into whether the deal might strengthen Microsoft's leading position in the DRM technology market.

Microsoft had long been a strategic investor in four-year-old ContentGuard, which makes DRM technology and owns 16 patents, with more in the pipeline. Microsoft, Time Warner and ContentGuard bought out most of Xerox's stake in the company; the ContentGuard technology originated at Xerox PARC.

Microsoft and AOL, which at the time owned Time Warner, battled over browsers, with AOL launching an antitrust suit against Microsoft for crushing the Netscape browser. When the companies settled that suit in 2003, they hailed the agreement as an opportunity to work together to fight digital piracy.

Microsoft licenses ContentGuard's technology for use in its Rights Management Services enterprise information protection services. Time Warner has not disclosed how it uses ContentGuard's technology.

"Under Microsoft's and Time Warner's joint ownership, ContentGuard may have both the incentives and the ability to use its IPR portfolio to put Microsoft's rivals in the DRM solutions market at a competitive disadvantage," the commission stated.

"The parties are cooperating fully with the commission as it is a complex area," a Time Warner spokesperson told internetnews.com. Microsoft executives did not respond to a request for comment.

It's a sensitive spot for Redmond. In March, the commission levied a record $613 million fine against Microsoft for abusing its monopoly position with the Windows operating system in European markets. The commission complained that Microsoft's bundling of its Media Player with the Internet Explorer browser shut out competing media players. Microsoft paid the fine, but is appealing the ruling.