RealNetworks tells judge it was a Microsoft target

WASHINGTON (Reuters) - Computer video and audio software company RealNetworks Inc. Wednesday accused Microsoft Corp. in court of seeking to restrict its

WASHINGTON (Reuters) - Computer video and audiosoftware company RealNetworks Inc. Wednesday accused MicrosoftCorp. in court of seeking to restrict its products because theyposed a threat to the software giant's dominant Windows operatingsystem.

In written testimony to U.S. District Judge ColleenKollar-Kotelly, RealNetworks Vice President David Richards saidthat, as recently as August last year, a senior Microsoft executivehad confirmed ReaNetworks was seen as a threat.

Richards said Microsoft withheld technical data fromRealNetworks to ensure that RealNetworks' audio and video playerwould not work as well with Microsoft's Windows operating system asthe Windows Media Player.

The RealNetworks executive was the third witness called by agroup of nine states seeking tougher sanctions against Microsoftfor violations of antitrust law.

The states, including California, Iowa and Connecticut haverejected a proposed settlement of the nearly four-year-old casereached last November with the U.S. Justice Department and nineother states.

But before Richards could testify, Kollar-Kotelly agreed with arequest from Microsoft to reject parts of his testimony andexhibits, which aimed to show Microsoft had forced computer makersto back away from agreements to install RealNetworks media playersin machines they sold.

The judge called those parts of Richards' testimony "classichearsay."

Included in the rejected material was an e-mail that suggestedcomputer maker Gateway Inc. feared retaliation by Microsoft if itwent ahead with a contract to place Real software on Gatewaymachines, according to a source familiar with the material.

"(T)hey will put us out of business," says an e-mail accountabout the 1999 contract negotiations exchanged between RealNetworksexecutives, the source said.

But much of Richards 90 pages of testimony was allowed.


Richards said that, in August last year, Microsoft VicePresident Jim Allchin informed RealNetworks that Microsoft believedits own rival product, called Windows Media Player, was part of theWindows operating system and RealNeworks was therefore a platformcompetitor.

"I do not think there is any question that Microsoft has sought,and continues to seek, to restrict the distribution, promotion, useand interpretability of RealNetworks," Richards wrote.

In the hearings, which are expected to last up to two months,the states are trying to make a case for stronger remedies to stopMicrosoft from spreading its dominance to new technologies likemedia players, hand-held devices and interactive televisioncontrollers.

The states are proposing that Microsoft sell a "modular" versionof Windows that would allow computer makers to strip out add-onfeatures like the Internet Explorer browser, or Microsoft's mediaplayer. They also would force Microsoft to disclose more about itssoftware and license its browser to other companiesroyalty-free.

Microsoft is arguing that the remedies suggested by thedissenting states are extreme and that any sanctions should beconfined to specific findings upheld by a federal appealscourt.

The proposed settlement of the government case is designed toremedy the antitrust violations by giving computer makers morefreedom to feature rival software on their products, among otherthings.

Judge Kollar-Kotelly is considering the proposed settlementunder a separate proceeding.