Commission to examine DRM venture Microsoft/Time Warner

By EDRi · August 25, 2004

The European Commission has decided today, 25 August 2004, to examine in depth the joint acquisition by Microsoft and TimeWarner of ContentGuard. This company, formerly owned by Xerox, is a world market leader in so-called Digital Rights Management technology. It has developed the Extensible Rights Markup Language (XrML). Microsoft has eyed the company for a long time and made considerable investments before announcing last April to couple up with Media Company TimeWarner in order to buy the remainder of the company. In July, Microsoft and TimeWarner filed a request for clearance of the deal with the EU’s merger control authorities. After a relatively brief review, the Commission has now decided to examine the planned acquisition in depth. “Under Microsoft’s and Time Warner’s joint ownership”, the Commission declares in a press release issued today, “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 merger controllers, still headed by the Italian Mario Monti, recall former competition cases involving browsers and media players. But they also take other EU objectives with a direct influence on competition issues into account: “This joint acquisition could also slow down the development of open interoperability standards. As such, this would allow the DRM solutions market to ‘tip’ towards the current leading provider, Microsoft.” The Commission must reach a final conclusion within four months from now on, i.e. until 25 January 2005. Most of the investigation will then be headed by the Dutch Commissioner Neelie Kroes, who has a reputation of being more Microsoft-friendly than her predecessor Mr. Monti.

Commission opens in-depth investigation into Microsoft/Time Warner/ContentGuard JV (25.08.2004)

(Contribution by Andreas Dietl, EDRI EU Affairs Manager)