ÍNDICE DE ANEXOS
2. PROSAS: Traducción de Ayala/Garay (1547) con la revisión de Urrea al frente
From the outset, it is considered important by this author to set out the complex product, market and profit structures of Microsoft and its competitors This information on how computer operating systems, media players, content producers, and consumers, interact is crucial in order to understand how the
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Commission established Microsoft’s tying behaviour was likely to affect competition in the market and hence be ruled unlawful.
1.1.1. Products
The Commission, in its decision, defines the various elements of software it considers as “system software” and “application software”. System software it states “controls the hardware of the computer” sending instructions on behalf of applications that fulfil a precise need for the user. It goes on to say that operating systems (Microsoft Windows being an example) are an example of system software; software controlling the basic functions of a computer, allowing the user to run application software.7 Media players are “application software”.8 Media players are defined as software products that play back audio and video content. A media player is able to “translate” digital content into instructions that are channelled to speakers or a display through an operating system.9
In order to distribute content such as audio and video over the internet software infrastructure is required. Different pieces of software enable media10 to be encoded, transmitted and played back by the recipient.11 The media information can be encoded into different formats. The formats define how data are arranged in digital media files. As digital media involves voluminous amounts of information compression and decompression algorithms have been developed, in order to make it possible to reduce the storage space required by audio and video content. The piece of code in a media player that implements a compression/decompression algorithm is called a codec”
(coder/decoder). In order to correctly interact with media content compressed in a given format, for example playing a video file, a media player needs to implement the corresponding codec.12 Different formats have different codecs.
7 Microsoft (n 4) para 37
8 ibid para 402
9 Microsoft (n 4) para 60
10 Such as video and audio
11 Microsoft (n 4) para 112
12 ibid para 61
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Some of these formats are open, which means that they are free for any software company to use and incorporate into their products, and others are proprietary formats.13 Different pieces of software are used to (i) encode a digital product (content producer); (ii) decode it (content consumer). Windows Media Player (WMP) is the software used by the consumer to decode media data. Most software developers don’t produce a complete software set for the entire process from encoding to play back by the user. The exceptions to this at the time were Microsoft, RealNetworks and Apple. Other developers who wished to use their technology to encode or decode media data would pay for a licence14 from one of these three companies or they used open industry standards.15
1.1.2. Profit and Market structure
Microsoft’s client software, that is the media player in question, was installed on every computer with the Windows operating system as a non-removable component.16 It could not play either Realnetworks’ format, Apple’s Quicktime format or MPEG-4, an open source format.17 Microsoft’s own encoding software was available through a free download.18 Its server streaming software, which only runs on Windows servers, was freely available with any version of Windows Server 2003 or as a download from Microsoft’s website.19 So ostensibly, Microsoft did not make direct profit from the provision of its streaming and encoding software when customers downloaded Microsoft’s own software. Although the Commission pointed out in its decision, more than once, that in reality the cost of Microsoft’s media player was hidden in the price of the operating system media player bundle.20 That is to say that the elements were technically tied through integration rather than being tied contractually.
13 ibid para 113
14 For example, for a software developer to incorporate Microsoft’s Windows Media Video 9 formats into its software it would cost 10 US cent for a decoder and 20 cents per encoder or 25 cents for both (as of January 2003) see Microsoft (Case COMP/C-3/37.792) [2005] 4 CMLR 965, footnote 132.
15 Microsoft (n 4) para 117
16 Microsoft (n 4) para 310
17 ibid para 122
18 ibid para 124
19 ibid para 123
20 ibid footnote 945 and 971
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In contrast to this RealNetworks, Microsoft’s competitor, made a substantial proportion of their revenue (39.8%) from licensing its software to consumers.21 This was because unlike Microsoft, RealNetworks sold two versions of its media player; one that was free and another that was a premium ‘paid for’
version.22 Further, while RealNetworks had a free version of its server software, its enterprise versions cost upwards from $4,199.23 RealNetworks had also recently developed a media player that could play Windows Media formats, but without using Microsoft’s codec, meaning that RealNetworks did not have to pay a licence fee to Microsoft.24
Other media players exist beyond Microsoft, Apple and RealNetworks, but they do not use their own format for encoding and decoding data.
“Musicmatch” and “Winamp” for example rely on Microsoft’s format. They provide only media players and do not provide software to create, manage or deliver digital content.25 This means that any content provider seeking to target Musicmatch users, for example, would need to use Microsoft’s software.