The war of words over Microsoft business practices continued at a Luxembourg court on Friday. At the centre of the second day's hearing was the issue of Windows Media Player
and whether the software giant should be forced to provide a version of the OS without it.
Microsoft rivals argue that unless the company offers a Windows version without the media player, it will extend its quasi-monopoly in the PC market over the digital media sector. "If Microsoft secures another dominant position it'll have the power of life or death over digital media formats, not just for computers but for mobiles and handhelds and other devices," said James Flynn, lawyer for the Computer Communication Industry Association (CCIA).
Speakers invoked the fate of the Internet browser Netscape as an example of what could happen in the media player market if Microsoft's dominance is not tackled.
The European Court of First Instance's president, Bo Vesterdorf, also heard arguments from Microsoft and its supporters against the European Commission's demand for Microsoft to offer a version of Windows without the media player.
Microsoft lawyer Jean-Francois Bellis rejected the Commission's argument that the player dominated the digital media market. He claimed that the rapid entry of Apple and Sony into the music download sector showed that users could select from a range of digital media formats. Bellis warned that forcing the company to unbundle it would "strike at the heart of Microsoft's business model". The harm to the company's reputation could not be undone by a later annulment, he said.
A Microsoft expert, Linda Averett, said that an unbundled version of Windows would increase costs for independent software vendors and website designers faced with the task of supporting customers or retro-fitting their software. This was because a modified version of Windows would not be able to support the same range of features that the full version does, she claimed.
This view was contested by RealNetworks representatives who demonstrated an unbundled version of Windows that appeared to have no problems with digital content.
Bellis argued that the Commission's remedy would not achieve its aim of giving consumers easier access to other media players. "No rational end user would take [the unbundled version of Windows] because it provides no benefits," he said. "Even if the remedy functions as the Commission envisages, media functionality in Windows will continue to have the same wide distribution as now," he said.
This was seized on by Microsoft's opponents who said it undermined the company's arguments that unbundling WMP would cause the company serious and irreparable harm. "Harm to Microsoft will only happen if [the unbundled version] was popular, but Microsoft has argued that there will be no demand for it," said the CCIA's Flynn.
David Evans, a Microsoft economist, said that there was no evidence that content providers were moving to WMP format as the Commission claimed. He cited research that showed 80 percent of websites were encoded in RealNetworks' format and that the average number of formats on a sample of 1,000 websites had risen from 2.1 in 2001 to 2.9 in 2004.
However, this claim was strongly rejected by Frederic Scherer, a former chief economist for the Fair Trade Commission, speaking for CCIA. He said that analysis of website user data showed that on average 56 percent of websites streamed in WMP format only.
Despite the Commission's argument that computer makers were not interested in shipping PCs loaded with multiple media players, Evans claimed that a recent study showed that the average computer sold in the US had 4.3 players.
Summing up the Microsoft case, Bellis said that RealNetworks appeared to be motivated by the support the Commission's case gave to its $1 billion lawsuit against Microsoft for damages. Arguing that the court should force the company to comply with the demands on unbundling the player, Commission lawyer Per Hellstrom said that Microsoft's ubiquitous presence thanks to its dominant position on the PC market "induces content providers to use WMP" and "shields Microsoft from competition in the media player market."
Hellstrom cited the history of Netscape, which saw its market share plummet from over 80 percent to less than ten percent, to show that "once Microsoft products have established their place in the market it can't be reversed." Six years ago, RealPlayer had twice as many users as WMP but now Microsoft's products have twice as many users as RealPlayer, he claimed.
"As soon as Microsoft has its own products in the market it quickly reverses the competitive landscape," Antoine Winckler, RealNetworks' lawyer, said. "Netscape shows us we can't afford further delay."