Real files antitrust suit, looks to break Hollywood studio 'cartel' |
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Real files antitrust suit, looks to break Hollywood studio 'cartel'
RealNetworks today filed antitrust claims against the DVD Copy Control Association and is seeking permission to file additional claims against some of the top Hollywood movie studios. The move comes amid a legal fight over RealDVD, a software product that allows consumers to copy DVDs to their computer hard drives.
In the suit filed today, RealNetworks claims that the studios collectively decided to avoid setting up individual agreements with the company through a "group boycott."
The suit notes:
Consumers are directly harmed by the Studios’ and the DVD CCA’s conduct. The risk the Studios faced – that some one of them would do a deal with RealNetworks or any other of their potential competitors – is the risk created by a competitive marketplace. Consumers would have obtained a new technology to gain more value from their DVDs, without having to pay again for a backup copy of the DVDs they had already purchased. The Studios decided to short-circuit this outcome so that they could appropriate all of the extra value themselves, through the means of a group boycott. The DVD CCA was the instrumentality that they used to effectuate the boycott. A group boycott is, indeed, a very effective means of achieving this objective. Not coincidentally, that is also why it is per se illegal under the antitrust laws.
It continues:
By their illegal agreement, the co-conspiring Studios have ensured that – unless a court intervenes – they will face no competition in the market for technology that enables a consumer to make a secure backup copy of a DVD that she already owns. With no competitors to challenge them, the Studios will face less pressure to make the technology available to consumers sooner rather than later, or to develop consumer-friendly features. Competition and consumers alike will suffer as a result of this unlawful conduct.
Real should know its way around antitrust law. In 2005, the company settled antitrust litigation with Microsoft, a case in which Microsoft agreed to pay its cross lake rival a cool $460 million in cash.
That cash infusion significantly bolstered RealNetworks at a tough economic time, essentially allowing it re-create its business. Could Real do it again?
Click here for the full case.
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