RealNetworks, Inc. 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 monopolize the growing field of digital media. The complaint 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. For example, the complaint alleges that Microsoft has used its monopoly power to restrict how PC makers install competing media players while forcing every Windows user to take Microsoft's media player.
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. Typically, litigation of this type takes about three years through trial. Despite the added legal expenses for the fourth quarter of 2003, RealNetworks expects to meet the guidance provided in its October 28 earnings release and expects to provide quarterly disclosure of the cost of this litigation.
RealNetworks has retained the law firms of Bartlit Beck Herman Palenchar & Scott, the Summit Law Group, and McManis Faulkner & Morgan to represent it in this lawsuit. RealNetworks' lawsuit is complementary to the European Commission's antitrust investigation of Microsoft and RealNetworks plans to continue to cooperate and support the European Commission's efforts.