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Microsoft, Ally Offer Antitrust Remedies

From Bloomberg News

Microsoft Corp. and Time Warner Inc. have offered concessions in a bid to overcome European antitrust obstacles to their purchase of a controlling stake in ContentGuard Inc., a maker of anti-piracy software, the European Commission said Monday.

The Brussels-based commission, the competition watchdog for the 25-nation European Union, is expected to decide by Aug. 25 whether to approve the purchase or open a four-month, in-depth probe.

The commission and the companies declined to outline the proposed concessions. Companies facing EU antitrust hurdles frequently offer to license technologies or sell divisions to scale back their market share.

At stake are attempts by Microsoft and Time Warner to set an industry standard for the software used to prevent illegal copying of music and films over the Internet, one of the main components in legal downloading services such as Apple Computer Inc.'s iTunes Music Store, the most popular. The U.S. online music market may grow to $1.7 billion by 2009 from $270 million now, according to industry analyst Jupiter Research.

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“Microsoft’s interest is to get into the technology and to compete against iTunes,” said Jonathan Sellors, a lawyer specializing in intellectual property in London. “I wouldn’t be surprised if they integrate it into Windows.”

Redmond, Wash.-based Microsoft, the world’s biggest software company, and New York-based Time Warner, the largest media company, agreed in April to buy Xerox Corp.'s stake in ContentGuard. The transaction’s value wasn’t disclosed.

Bethesda, Md.-based ContentGuard’s technology allows record labels, film distributors and other media companies to control how consumers use downloaded documents, audio or video or to ensure royalty payments for the content.

“Both parties are cooperating fully with the commission and we look forward to concluding this process during the initial phase of the review,” said Dirk Delmartino, a Brussels-based spokesman for Microsoft. Time Warner spokeswoman Mia Carbonell said the company was cooperating with the investigation.


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