EU Holding Pattern on ContentGuard Deal

European Union (EU) antitrust regulators called a timeout in their antitrust
investigation of a proposed Microsoft/Time Warner acquisition.

An EU spokesperson based in the United States said he had received no information about
a suspension of the investigation.

But another spokesperson based in Brussels told reporters that the commission
was holding off on the investigation while it awaited official notification from
Microsoft and Time Warner about Thomson’s involvement.

“There is information still missing, so we stopped the clock for the moment,”
the spokesperson told the Associated Press.

Another person familiar with the investigation confirmed to internetnews.com
that the investigation was on hold, calling the timeout “a very normal part of the process”

Neither ContentGuard nor Time Warner spokespersons would confirm the reports that the
EU had suspended the investigation. A U.S.-based Microsoft spokesperson said he had no information,
but had no reason to question the reports.

In April 2004, Microsoft and Time Warner announced
plans to make a final acquisition of ContentGuard by buying out Xerox; they notified the
European Commission as a courtesy. Xerox spun ContentGuard, a vendor of
digital rights management (DRM) technology, out of its R&D labs in 2000.

But instead of rubber-stamping the deal, the EU opened an in-depth probe into whether
the deal might strengthen Microsoft’s dominance in the DRM technology market. The investigation
had a Dec. 22 deadline.

On Nov. 22, Thomson
bought into the deal,
acquiring an aggregate 33 percent voting stake in four-year-old ContentGuard from Microsoft,
Time Warner and Xerox. Thomson , a Parisian company, could make the deal more
palatable to the EU.

Paris-based Thomson said Monday it would make a strategic investment in ContentGuard.
The deal places Thomson in partnership with current investors Microsoft and Time Warner.

Microsoft is a long-time strategic investor in ContentGuard, which holds 16 patents and has
more applications in process. ContentGuard’s XrML is the basis of the recently approved ISO MPEG
REL standard, which assigns rights and usage to digital objects, and Microsoft uses the technology
for its Rights Management Services enterprise information protection services.

According to JupiterResearch, U.S. companies will spend some $274 million on enterprise DRM
software by 2008, up from $36 million this year. (JupiterResearch and internetnews.com are both owned by Jupitermedia.)

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