French technology company Thomson SA said Monday it has agreed to join Microsoft and Time Warner Inc. as a partner in ContentGuard...
a move expected to ease European regulators' concerns over Microsoft's involvement in the anti-piracy software company.
Under the deal, Thomson would have a 33 percent voting stake in ContentGuard, and also have the right, like its two partners, to name two directors to the U.S.-based company's board. Time Warner and Microsoft bought ContentGuard in April from Xerox Corp., which still owns a small equity stake.
ContentGuard builds digital rights management software used to protect video, music and other digital content from illegal copying and distribution over the Internet. The demand for DRM standards and software is expected to increase as the market for digital content grows.
The European Commission, a part of the European Union, threatened this month to block the ContentGuard deal because of Microsoft's involvement, fearing the software giant's market clout, the Associated Press reported.
Dario Betti, analyst for market research firm Ovum, said in a research note that Thomson's involvement "brings very valuable expertise to the company (ContentGuard), and makes Microsoft look less threatening in the eyes of the EU Commission."
"Thomson's participation makes the deal more digestible to regulators and competitors," Betti said.
In addition, Thomson's 35,000 technology patents, including one for the popular MP3 music format, can help establish ContentGuard as an intellectual property company that holds patents for the concept of interoperable DRM, Betti said.
"As the number of online content services increases, we are experiencing a proliferation of different DRM systems. The role of companies such as ContentGuard that support interoperability among these systems is becoming more important," Betti said.
In a joint statement, the three companies said they hoped the deal would eventually help promote development of interoperable DRM systems, make more consumer devices supporting DRM available and encourage content providers to distribute more products.
"With the participation of Thomson, a recognized leader in IP licensing, we add a European headquartered partner that will make this important technology more accessible" to businesses deploying web services and consumer device makers, Bill Gates, chairman and chief software architect for Microsoft, said in the statement.