RealNetworks, Inc announced yesterday that it has sued the Microsoft Corporation for violations of federal and state antitrust laws. The complaint was filed in federal court in San Jose, California and alleges that Microsoft has illegally used its monopoly power to restrict competition, limit consumer choice and attempt to monopolise the field of digital media.
The complaint also alleges that Microsoft has pursued a broad course of ‘predatory conduct’ over a period of years by abusing its monopoly power, resulting in substantial lost revenue and business for RealNetworks.
RealNetworks cited as an example Microsoft’s monopoly of power to restrict how PC makers install competing media players while forcing every Windows user to take Microsoft’s media player.
‘While we much prefer competing in the market — as we are doing and have done for 9 years — our Board has made a carefully considered business decision to take this action to end Microsoft’s illegal conduct and recover substantial damages on behalf of our shareholders,’ said Rob Glaser, Chairman and CEO.
Glaser added, ‘Despite Microsoft’s tactics, RealNetworks has continued to innovate and diversify, and we will continue to do so. Over the last five quarters, we’ve successfully grown our business as a whole by introducing exciting new products and services, and we’re on track for our sixth straight quarter of revenue growth. However, we believe our business would be substantially larger today if Microsoft were playing by the rules.’
‘We believe Microsoft’s conduct is illegal, and that conduct has prevented us from competing solely on the merits of our products,’ said Bob Kimball, RealNetworks’ Vice President and General Counsel.
Mr. Kimball continued, ‘Our case is based on many of the same types of Microsoft conduct that US courts have already declared to be illegal, such as failure to disclose interface information and imposing restrictions on PC makers, as well as a broad course of additional predatory conduct.
‘RealNetworks is seeking substantial damages that could well exceed a billion dollars, in addition to injunctive relief to prevent future illegal conduct by Microsoft.’
RealNetworks expects the cost of the litigation for 2004 to be approximately $12 million, in addition to approximately $1.5 million relating to the litigation this quarter.