EC To Revisit Microsoft’s ContentGuard Deal

The European Commission on Friday said it had restarted its antitrust review of Microsoft and Time Warner’s acquisition of anti-piracy software company ContentGuard, according to wire service reports.

The future of the proposed ContentGuard takeover remains on shaky ground despite the fact that Microsoft and Time Warner modified the original offer and brought in French technology company Thomson, according to a report published by the
Associated Press.

The latest development regarding the EC’s “phase II merger inquiry” has shown concern about Microsoft potentially using its dominant
position to bundle Content Guard technology, even though it would be a part-owner in the company with Time Warner and Thomson.

Worried the deal could create a dominant position for Microsoft on the continent in the Digital Rights Management technology market, the European Union Commission, which regulates mergers and takeovers, launched a four-month investigation of the deal last August.

“Microsoft has provided the information which was necessary; we are examining the original deal,” commission spokesman Jonathan Todd told reporters on Friday.

The development comes after the European Commission on mergers requested that Microsoft provide more information regarding its planned stake in ContentGuard, which already
holds 16 patents in DRM technology, and has more applications in process.

As has reported, ContentGuard’s XrML standard is the basis of the recently approved International Standards Organization
(ISO) MPEG Rights Expression Language , which assigns rights and
usage to digital objects, a key feature of DRM.

According to the report, the European Union’s head office set an April 7
deadline to approve or block the deal. It added that the clock had been restarted on the review after the European Commission received “sufficient” information to meet the commission’s requirements.

Microsoft and New York-based media giant Time Warner bought out most of ContentGaurd stake, held by Xerox last April, but ran into problems with the European Commission, which threatened to block the
deal because of fears of Microsoft’s market power.

Thomson was brought in as a one-third stake holder on Nov. 22 in an
effort alleviate EU concern about the project.

Regulators still could demand concessions in exchange for approval or
block the deal outright, according to the report.

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