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Friday, March 4, 2011

Web Video Rivalry Sparks U.S. Probe - WSJ.com

TECHNOLOGY
MARCH 4, 2011

Web Video Rivalry Sparks U.S. Probe

By THOMAS CATAN

The Justice Department is investigating whether a group representing some top technology firms is unfairly trying to smother a free rival technology for delivering online video that is backed by Google Inc., according to people familiar with the matter.

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Much the way firms battled in the 1980s over VHS and Betamax video formats, tech rivals are fighting over the technology used to deliver and display Web video. Currently, video-streaming services like Netflix Inc. and Google's YouTube pay patent royalties, as do makers of Blu-ray disc players and other hardware.

These firms pay royalties to an organization called MPEG LA, which is the target of the formal antitrust probe, the people familiar with the matter said. MPEG LA has amassed pools of patents covering widely used video formats and collects royalties for its members, which include Apple Inc. and Microsoft Corp.

Antitrust enforcers are investigating whether MPEG LA, or its members, are trying to cripple an alternative format called VP8 that Google released last year—by creating legal uncertainty over whether users might violate patents by employing that technology, these people added.

The probe, which pits Google and open-source software advocates against some technology giants like Apple, could help determine whether anyone will own rights over the creation and broadcast of online video in the next major Web programming language, called HTML 5.

At stake is "who is going to have competitive clout in the world after television," said Eben Moglen, a Columbia University professor who supports free and open software.

The California State Attorney General's office is also investigating the matter, according to people familiar with the matter.

MPEG LA didn't confirm or deny it is under investigation. But the group says it isn't acting to kill a competitor. It said it's simply offering a service for patent holders and is agnostic about which video format prevails.

"We are effectively a convenience store" for licensing patents, said Larry Horn, MPEG LA's chief executive. "We have no dog in that fight."

Representatives of both law enforcement agencies as well as Apple and Google declined to comment. Microsoft didn't respond to a request for comment.

MPEG LA, which was formed in the late 1990s,manages the licensing of more than 1,700 patents used in a high-definition video encoding standard known as H.264. The Justice Department is concerned the group's actions may stifle competition to that dominant format, the people familiar with the matter said.

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