RealNetworks in Settling "Antitrust Case of Century" with Microsoft

October 11, 2005

Cleary Gottlieb represented RealNetworks in their long running antitrust dispute with Microsoft, leading to a settlement concluded on October 11, 2005. This case has been described as the “antitrust case of the century.” The settlement was described by commentators as highly beneficial to RealNetworks. Shortly after the announcement, RealNetworks’ share price increased by more than 30%.

Under the settlement, Microsoft will pay RealNetworks $460 million in cash and $301 million in a combination of cash payments and promotional services. In addition, Microsoft will provide RealNetworks with long-term access to important Windows Media technologies.

The case started in 2001 with the European Commission’s investigation of Microsoft’s tying of Windows Media Player. In March 2004, the European Commission issued a formal decision, holding that Microsoft’s tying practice infringed EC competition law. The Commission imposed fines on Microsoft and required it to offer an unbundled version of Windows that did not include the Windows Media Player. Microsoft appealed the decision to the European Court of First Instance and requested an interim suspension of the decision pending appeal. On December 22, 2004, the President of the Court of First Instance rejected Microsoft’s request for interim suspension, opening the way for an implementation of the Commission’s decision. The main appeal proceedings are still pending.

RealNetworks filed several written submissions and made presentations at oral hearings both in the proceedings before the European Commission and the Court of First Instance, providing important input on technical, economic and legal issues. In addition, it brought a private lawsuit against Microsoft in the United States and participated in the proceedings initiated by the Korean antitrust authorities against Microsoft.

Cleary represented RealNetworks and others through all stages of the European Commission and Court proceedings. It also provided European law advice in connection with RealNetworks’ U.S. litigation and Korean proceedings.