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Microsoft, Time Warner and Thomson buy ContentGuard

With help from friends, MS gets hands on DRM patents

The European Commission has given Microsoft, Time Warner and Thomson the green light to close their joint acquisition of digital rights management (DRM) company ContentGuard.

Microsoft and Time Warner attempted to buy ContentGuard last year but the proposal was met with concern by the Commission, which said it feared that the software and media giants would use their combined strengths to gain control of the DRM market. The companies then brought in French electronics maker Thomson as a partner in the acquisition bid.

The triumvirate has now successfully completed the ContentGuard buy. Each will hold equal voting positions in the company, as well as appoint two board members, they said.

Executives for Microsoft and Time Warner said in statements that they had worked closely with the Commission to reach a resolution and were pleased with the outcome. The regulatory go-ahead comes as Microsoft continues to work its way through its appeal against the EC’s antitrust ruling of last year.

All three purchasing companies said they plan to use ContentGuard's DRM technologies to help protect movies, music and other digital content from being illegally copied or accessed by unauthorised users. ContentGuard holds numerous patents that cover aspects of DRM and distributed authorisation of content.

The addition of Thomson to the deal makes Microsoft look less threatening in the Commission's eyes, Ovum analysts wrote in a report on the acquisition.

Thomson knows a lot about intellectual property management and can offer strong channels to the market, according to Ovum. Instead of controlling ContentGuard's DRM patents, Microsoft could be one of its biggest customers, the analyst group said.

The deal gives Microsoft access to DRM technologies without having to worry about intellectual property disputes such as the one it had with Intertrust Technologies, according to Ovum.

As online content services increase, a number of DRM systems will enter the market, offering a role for companies like ContentGuard that support interoperability, Ovum predicted.

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