Microsoft: Predatory Pricing Set To Kill MPEG-4


Microsoft's announcement of licensing fees for its codecs on non-Windows systems has sent chills through MPEG-LA, the 18-member consortium that develops the MPEG standard.

MS announced it will charge 10¢ per decoder, 20¢ per encoder and 25¢ for both of them. This compares with 50¢ for the use of both the MPEG-4 decoder and encoder, or 25¢ for use of either.

MPEG-4, based on Apple's QuickTime file format, is expected to be widely adopted by consumer electronics manufacturers, for use in DV cameras and home DVD players, as well as DVD movies. Current DVDs use MPEG-2 compression, while VideoCDs use MPEG-1. The most commonly used audio compression format, MP3, also uses MPEG. Internet broadcast video is currently split between three competing fcormats: Windows Media, Real Networks' Realplayer, and Apple's QuickTime.

Supporters of the open-standard MPEG and developers of MPEG software and hardware have protested against Microsoft's pricing and licensing schemes.

"Is every camcorder going to have a Windows logo on the side of it, or is every DVD going to play back in Microsoft Windows Media format?" said Elliot Broadwin, chief executive of iVast, to ZDNet UK.

A spokesperson for Microsoft in the ZDNet UK story argued that Windows Media delivered better-quality video and superior compression to its competitors. He said that MS's Windows Media therefore "benefit[ed] consumers".

MPEG-LA gave Microsoft a window of opportunity over the past year as the major adopter of MPEG-4, Apple, delayed the release of its QuickTime 6 due to disputes over licensing fees. A compromise was announced some months ago, together with a $1 million/50,000 user threshold.

MPEG LA's Larry Horn is not convinced that the licensing fees will determine the outcome of the codec wars, however.

"The marketplace is going to decide which technology it wants to use, There are choices that go with using a proprietary technology -- those that do, do it at their own peril," Horn says in the article.

Analysis: Released of its anti-trust shackles, Microsoft does what monopolists do: uses predatory pricing and its dominant market position to price rival technologies out of the business, simultaneously quashing innovation. The key point here is that Redmond discriminates against non-Windows users [that means you and me, Mac]. In politics, this might be akin to giving social security payment extensions only to those who voted Republican. In Microsoft's case, this should be illegal. Not because of the price - but because MS is abusing its dominant position and because its objective is clearly anti-competitive.