MS ANTITRUST: MS backs off music player proposal

Microsoft Corp. quickly backed off on a proposal to portable music player manufacturers that if they chose to include Windows Media Player in software packages, only that program could be included, the U.S. Department of Justice (DOJ) reported Thursday in its update on the company’s compliance with its antitrust settlement.

After a complaint was received by the company, Microsoft circulated a final draft of the specification 10 days later reversing course, saying that distribution of its Media Player was not exclusive if companies wanted to participate in its program. The DOJ said it was “unfortunate” that the former draft contained the exclusivity provision, but said it would drop further action against the company.

The company that complained is not identified in the report. Microsoft reached a settlement with the DOJ in 2002, and a report is filed every six months detailing the company’s progress in complying with the agreement.

Microsoft spokeswoman Stacy Drake said a draft marketing proposal was sent to manufacturers for feedback before it had been reviewed by the company’s legal team. After receiving the complaint, the legal team nixed the exclusivity portion, she said.

Drake said Microsoft realizes it has an extra layer of responsibility under its agreement with the DOJ, even though exclusivity agreements are an industry standard with other companies. Microsoft informed the DOJ that it had received the complaint, she said.

“We wouldn’t allow something like this to be implemented in the marketplace,” Drake said.

Last year, the European Commission, the European Union’s executive body, ordered that Microsoft sell a version of Windows XP without its Media Player software, saying the company had an unfair advantage over other companies that offer media players.

A dominant market player can’t impose an exclusivity agreement, and the European Commission — if the complaint had been forwarded to them — may have looked “sympathetically” at the complaint, said Anthony Woolich, head of the European Union competition team at Lawrence Graham LLP in London.

“I think Microsoft did well to back down from a U.S. and E.U. perspective,” Woolich said.

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