IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

STATE OF NEW YORK ex. rel. Attorney General ELIOT SPITZER, et al.,

Plaintiffs,

v.

Civil Action No. 98-1233 (CKK)

MICROSOFT CORPORATION,

Defendant.

DIRECT TESTIMONY OF LINDA WOLFE AVERETT

TABLE OF CONTENTS

Background. 1

I. The Role of Digital Media Technology in Windows. 3 A. Identifying a Baseline of Functionality in Windows for Digital Media Applications. 4 B. The Two-Stage Process of Exposing Digital Media Functionality in Windows to Developers. 8 C. Digital Media Functionality Currently Exposed by in Windows XP.. 9 D. Microsoft’s Compliance with the Proposed Consent Decree with Regard to “”. 11 II. Specific Complaints Raised by RealNetworks. 12 . “Copy to Audio CD” Functionality. 12 A. Secure Audio Path.. 15 B. Play All Feature. 18 C. IE6 Media Bar. 20 D. Music Search Capability. 27 E. Default Choice of Media Player. 28 F. Issues. 29

1. My name is Linda Wolfe Averett. I am the Product Unit Manager for Windows Media Player in the Digital Media Division of the Platforms Group at Microsoft Corporation. Before being promoted to my current position, I was the Group for the Windows Media Platform.

2. As Product Unit Manager of Windows Media Player, I have overall responsibility for (i) determining what features to include in the software, (ii) identifying the target users of the software, (iii) planning when new versions of the software will be released to the marketplace, (iv) evaluating technologies to be included in the software, and (v) deciding which of those technologies will be offered to developers building on the Windows platform so that they can call upon the technologies in their own products.

Background

3. From 1995 to 1997, I was the Group Program Manager for a digital imaging product called Picture It. As Microsoft’s first entry into the digital imaging segment of the software business, Picture It was a relatively simple application designed to make it easy for consumers to take advantage of the emerging field of digital photography. From 1997 to 1999, I was Group Program Manager for Picture It and for another Microsoft digital imaging product called PhotoDraw. Unlike Picture It, PhotoDraw was aimed at corporate customers rather than consumers. Our goal was to make it easy for with no graphics expertise to include pictures in documents or in Web pages on corporate intranets.

4. I have worked in the computer industry for more than 30 years. After graduating from the University of Tennessee in 1970 with a Bachelor of Science degree in Engineering Physics, I worked for the Atomic Energy Commission as a software developer for two years, and then I went to work for a small company called Electronics Associates. It was there that I got my first exposure to operating systems. Electronics Associates developed real-time operating systems for use in instrumentation control. A real-time is one that reacts on an almost instantaneous basis to inputs in order to affect a process it is controlling. Such real-time operating systems are embedded in industrial controllers and similar devices.

5. After two years at Electronics Associates, I went to work for Hewlett-Packard. I spent the next eight years working my way up through the ranks from lead developer to project manager to research and development manager. Most of my time at Hewlett-Packard was spent focused on real-time operating systems used in various types of medical equipment and instrumentation control. My last project at Hewlett-Packard involved the development of a new computer system with what is known as a reduced instruction set computing (or RISC) architecture—as opposed to the complex instruction set computing (or CISC) architecture of most Intel-compatible microprocessors.

6. In 1981, I left Hewlett-Packard and went into business with my husband developing computer games. Our company developed most of the games for the Philips Odyssey gaming console, an early precursor of Sony’s PlayStation and Microsoft’s . The company later started developing games for personal computers (“PCs”). As a result, I have had substantial experience as a third-party developer building applications to run on the Windows platform.

I. The Role of Digital Media Technology in Windows

7. As a leading platform company, Microsoft listens carefully to the input of developers who are building on the Windows platform. Based on my experience first as a developer of Windows applications and then as a program manager for digital imaging and digital media applications at Microsoft, I believe that Microsoft enables developers to create world-class applications on Windows. Microsoft does that by providing (i) a rich, stable and consistent platform that provides developers with assurance that their products will run on different brands of PCs, and (ii) powerful tools and interfaces that developers can rely on to build their products. It is Microsoft’s willingness to supply developers with increasingly rich functionality that enables them to focus on providing unique value-added features in their products instead of re-implementing and re-testing core functionality. If Windows becomes frag- mented, the pace at which new hardware and software products get created for use with Windows would slow.

8. I also believe—based on my experience as a developer of consumer products for Windows— that the rich, stable and consistent Windows platform is what enables the typical consumer to go to Wal- Mart to buy a PC that supports a wide range of hardware and software. Prior to the days of Windows 3.1 and establishment of the multimedia PC, it was essentially impossible for an average user to buy a PC that would run his/her multimedia applications. The user had to understand what type of display, what type of sound card, and what type of video card was installed on his/her PC, and other equally arcane technical issues; then the user had to read the disclaimer for each piece of software to verify it had been tested with the configuration of software and hardware on the user’s PC. It was not until Windows established a baseline of hardware and software functionality for multimedia applications that retailers and consumers alike could be confident that those multimedia applications would run on PCs. That baseline of functionality also permitted developers to focus on innovating in multimedia applications rather than testing all possible configurations of hardware and software that a user might end up with on his/her PC. Providing ever better functionality in the operating system to support digital media applications is an important part of our efforts to advance Windows as a platform.

A. Identifying a Baseline of Functionality in Windows for Digital Media Applications

9. The primary jobs of the Windows Media team are to ensure that (i) Windows operating systems are a great platform on which to develop digital media applications, (ii) users have a compelling media experience with Windows right out of the box, and (iii) the end-to-end media functionality in Windows meets developers’ and users’ requirements. To be successful at our primary jobs, my Windows Media team does three things for each release.

10. First, we identify the feature set required to provide a compelling media experience for Windows users and to enable potential business models for content providers. This becomes the feature set of Windows Media Player in any given release. 11. Second, we identify the baseline media functionality that all developers need to call upon in creating digital media applications, and then make that baseline functionality available in Windows through published application programming interfaces (“”). Note that for any given release, the baseline functionality is a subset of all the media features we include in Windows because those features have to be implemented, tested and shown to provide value to users and/or developers before we make them part of the baseline functionality. Additionally, not all of the features we implement will become part of the baseline functionality because not all of them are generally useful to a wide range of developers. The baseline functionality is used throughout Microsoft to provide integrated media features—as opposed to each Microsoft product team re-implementing that baseline functionality. That baseline functionality is also used both by third-party developers of Windows applications as well as by Web page designers.

12. As I noted above, including this baseline functionality in Windows enables developers of digital media applications to concentrate on value-added features that will make their products more appealing to consumers rather than spending their time re-implementing the baseline functionality. This has the effect of providing more choices for consumers and driving the state of the art forward at a faster rate because the cost of entry into digital media applications is lowered and that enables more developers to bring products to market.

13. Third, for any given release, Windows Media Player is a test vehicle for ensuring that a wide variety of hardware devices work in end-to-end media experiences right out of the box. This end-to-end testing benefits all developers who provide digital media products for Windows because their products all need to work with those same hardware devices. In other words, the end-to-end testing that Microsoft does with Windows Media Player benefits users even if they choose to use another media player. For example, in the recent Windows XP release, Windows Media Player served as the end-to-end test vehicle for copying information to read/write CD-ROMs and for Video//Renderer (“VMR”) accelerated video display capabilities. Other developers can now call upon that functionality, which is stable and reliable by virtue of the end-to-end testing it received through Windows Media Player.

14. Like software in general, the baseline functionality for digital media applications changes over time. Three or four years ago, the baseline functionality that developers needed was the ability to play audio and video content stored locally on a user’s PC and to stream multimedia content down from the Internet. Using such streaming technology, consumers with relatively high bandwidth connections could listen to audio content and watch video content in a manner similar to broadcast radio or television. Dial- up modem users could also see/hear lower quality renditions of the same content. All leading media players, including Apple’s QuickTime and RealNetworks’ various media players, all supported streaming in that timeframe.

15. The feature set required to provide a compelling experience for users of digital media applications has broadened substantially over the past four years. It now includes the ability to (i) copy media to and from devices such as a CD or portable digital music player, (ii) manage a content , (iii) acquire and display metadata about the media being played and (iv) create and display a playlist of that media. Metadata is information that is associated with a particular media file, such as the name of a song, the artist, the track names on a CD, the chapter titles on a DVD, the year the recording was made or the musical genre. A playlist is a collection of songs or other media that a user or an Internet content provider has selected to play. The latest software from Microsoft, RealNetworks, Apple and MusicMatch support most or all of these features. The screen shot below shows an example of a playlist displayed in Windows Media Player that includes metadata for the tracks on a popular music CD.

16. Windows XP includes baseline functionality (exposed through APIs) to support the feature set currently required for a compelling media experience, and as part of our ongoing Windows development process we will soon be identifying how to enhance that baseline functionality for the next version of Windows. For instance, we may provide higher level APIs that enrich our current baseline functionality, such as the ability to (i) copy media to and from a device such as a portable MP3 player or the CD drive of a PC while managing the associated metadata and digital rights, (ii) easily view and manage a media library, including quick access to basic filters on the library (such as the name of the artist), and (iii) synchronize media between a portable device and a local library. A media library is a fast index for viewing and filtering content. Once this improved baseline functionality is made accessible to Windows developers, they will be able to take advantage of it in their products. That will permit developers to focus their efforts on new innovations beyond the baseline functionality, providing more compelling products for users.

B. The Two-Stage Process of Exposing Digital Media Functionality in Windows to Developers

17. The process I have described above is evolutionary and proceeds in two basic stages. Let me provide a real-life example of what I am talking about. For Windows Millennium Edition (“Windows ME”), the Windows Media Player included a feature to copy songs to an audio CD. Third-party developers offered a similar feature and each invested substantial effort to developing and testing the feature. This functionality was clearly established in the marketplace as baseline functionality that a broad range of developers would need in creating digital media applications. So, recognizing this new baseline functionality, Windows XP now exposes to all applications the ability to copy information to a read/write CD-ROM through a set of APIs that are fully documented on the Microsoft Developer Network (“MSDN”). Building on that baseline functionality, Windows Media Player permits users to create an audio CD by (i) specifying particular songs to be copied to the audio CD, (ii) converting those songs to the standard CD-compatible (“Redbook”) audio format that is used to record audio CDs, and (iii) calling the APIs in Windows to copy the songs to the CD. Today, other developers can use the baseline functionality in Windows to copy information to read/write CD-ROMs, but each of those developers has to implement the code that converts songs to the Redbook audio format before calling those Windows APIs. For the next version of Windows, we will consider providing a set of interfaces that will do the conversion of songs to Redbook audio format as well as copying those songs to a CD, thus enabling a wider range of developers to include this end-to-end functionality in their products.

18. There are valid technical reasons for following this two-stage process. You first need to create a new technology on an end-to-end basis and become very knowledgeable about how it works before you start breaking the technology into pieces that can be made available for other developers to use. Until Microsoft is confident that it has figured out how to provide a particular functionality, it does not want third-party developers building products that rely on our functionality. Microsoft needs to be confident that it has delivered the right technology, with the right APIs that it can support for a long time in Windows. Opening a functionality up to third-party developers at the very outset would severely limit Microsoft’s ability to change the way it implemented the functionality. Such changes may be necessary to fix problems with the original implementation or to improve its performance. Thus, until Microsoft is comfortable that it has implemented a functionality correctly, it does not want to make that functionality available to the world at large and create an expensive legacy that must be supported over time.

C. Digital Media Functionality Currently Exposed by Microsoft in Windows XP

19. Microsoft has a broad range of APIs that it makes available in Windows XP for use by digital media applications. Windows includes a runtime that will play content encoded in the Windows Media format and MP3 format; I refer to this as the WMF runtime. The WMF runtime is part of Windows and the interfaces it exposes to developers are fully documented on MSDN. As a result, anyone who wants to use the WMF runtime to play content encoded in Windows Media format or the MP3 format can do so. All that developers need to do is download the WMF SDK (short for software development kit) from MSDN and accept the standard license agreement. Microsoft also makes a redistributable version of the WMF runtime available in the WMF SDK so that developers can be sure the latest version of the technology is present on certain older versions of Windows on which their digital media applications may run. As a result, various media players, including RealNetworks’ RealOne, are able to play content encoded in Windows Media format without having to implement that functionality in their own products.

20. There is another set of high level media APIs in Windows XP called the Windows Media Player OCX that are also fully documented in MSDN. Large numbers of developers use these APIs today. A developer can call upon the APIs exposed by the Windows Media Player OCX without under- standing much of anything about digital media technology; we have tried to make it very simple and straightforward. Developers of Windows applications and Web page designers can play various types of audio and video content using the Windows Media Player OCX, and can expose standard functions like Start, Stop, Pause, Rewind, Fast Forward and to users. The screen shots below show the Windows Media Player OCX playing a clip in the Web page for Yahoo! Finance Vision.

D. Microsoft’s Compliance with the Proposed Consent Decree with Regard to “Windows Media Player”

21. Microsoft is currently engaged in determining all internal interfaces in Windows that are relied on by Windows Media Player, which uses the Windows Media Player OCX and the WMF SDK. We are doing this work because Windows Media Player has been classified as “Microsoft Middleware” under the Proposed Consent Decree. When we are finished, all interfaces used by Windows Media Player to call other parts of Windows (including other blocks of software code classified as “Microsoft Middle- ware”) will be documented on MSDN such that other developers have the ability to use those same interfaces. Microsoft intends to comply with the letter and spirit of the Proposed Consent Decree, and thus the Windows Media Player team has performed a very rigorous review of our software code to ensure we will be in compliance with Section III.D by the established deadline. 22. It is my team’s general practice to use documented interfaces to call upon functionality in the remainder of Windows. We do this for sound engineering reasons—just like other developers outside Microsoft do. If we use undocumented internal interfaces, we run the risk that software will break when those interfaces change as Windows is improved in successive versions. Similarly, we encourage other teams within the Windows organization and third-party developers to use only documented APIs to call upon the functionality of Windows Media Player and the technologies on which it relies.

23. We have run automatic tools against the source code for both the Windows Media Player, which includes the Windows Media Player OCX, and the WMF SDK to determine interfaces they call in other parts of the operating system. We have run these tools against versions 7 and 7.1 on Windows 2000 and against our new version of Windows Media Player which is currently under development, code- named Corona. In addition, we have performed a manual review of the source code to look for calls to interfaces that are not easily identified with automatic tools. This is a painstaking process, and we are devoting substantial resources to ensure that it is done correctly.

II. Specific Complaints Raised by RealNetworks

A. “Copy to Audio CD” Functionality

24. I am aware that RealNetworks has raised an issue with the fact that an individual launch point in Windows XP that provides access to the “Copy to Audio CD” functionality of Windows Media Player is not accessible to third-party products. That launch point appears as a hyperlink in the left-hand panel of the My Music folder. A screen shot showing the launch point appears below.

Although Microsoft will enable third-party products to register for this launch point in Service Pack 1 of Windows XP (our first major upgrade of the operating system), we were not far enough along with our end-to-end testing of the ability to create audio CDs at the time Windows XP was released last year to make this launch point available for use by third parties.

25. The process of copying information to CDs in Windows Media Player for earlier versions of Windows was quite problematic and a source of consumer dissatisfaction. In fact, the difficulty of copying information to CDs was one of the highest generators of product support calls for the Windows Media Player versions 7 and 7.1, accounting for the number third, fourth and ninth most common support issues. There were problems with hardware devices used to write information to CDs as well as problems with the software used by those devices. To improve the user experience with read/write CD-ROMs and thereby make digital media applications more appealing, Microsoft brought in-house all of the technical problems that had arisen in the field with regard to copying information to CDs. That involved Microsoft testing a wide array of hardware devices and a wide array of related software to find conflicts when the different technologies were used in parallel. It was a time-consuming and difficult process, and we came right down to the wire on shipping Windows XP before we were able to get the end-to-end Copy to Audio CD functionality in Windows to behave in a stable and reliable manner. The Copy to Audio CD feature includes (i) the passing of selected files to the Windows Media Player to write the audio CD, (ii) the actual copying of information to the CD, (iii) the exposure of both data and audio copy operations in the CD Writing Wizard, and (iv) the correct detection in My Music of when to show the Copy to Audio CD feature. It is a complicated process. 26. Happily, the Copy to Audio CD functionality in Windows XP, which uses the Windows Media Player for the audio copy capability, has worked well for consumers. As a result, Microsoft is now ready to enable third-party applications like the RealPlayer to register to be the provider of the audio copy capability in the end-to-end Copy to Audio CD feature that is exposed in My Music and the CD Writing Wizard in Service Pack 1 of Windows XP. We are now comfortable with the end-to-end feature, including the ability to copy to a wide variety of devices, the ability to properly pass the correct set of files, and ability to correctly trigger the exposure of the Copy to Audio CD feature in My Music (which is determined by the correct registry of a CDRW drive and media).

27. Even though Microsoft was not able to expose this launch point at the release of Windows XP, RealNetworks, MusicMatch and others were fully able to create audio CDs using their own entry points. For instance, entry points could have been provided by registering for the autoplay dialogue for a blank CDRW and adding a context handler for music tracks with an entry for Copy to Audio CD.

28. As I described earlier, Microsoft needs to implement and test end-to-end features before making portions of the functionality available for use by other developers. In this case, we are enabling third-party developers to provide one portion of the end-to-end feature, so it was imperative that we have the entire process fully developed and working before we did that. We are now in a position to document the range of capabilities that a third-party must provide in order to supply a part of the end-to-end feature.

B. Secure Audio Path

29. I am aware that ReaNetworks has raised the issue that it has been denied access to the Secure Audio Path in Windows XP. The Secure Audio Path, as it currently exists, is part of the Windows Media format and can be used via the digital rights management (“DRM”) technology included in the WMF SDK. A basic explanation of Secure Audio Path is that it enables the protection of media all the way from the content provider to the actual audio card that plays the content. To accomplish this protection, Secure Audio Path adds “noise” (static) to DRM-protected content that is defined to require SAP, much like the way premium cable channels are scrambled, so that if the content is intercepted on the way to a hardware device it will not be good quality content. The noise is removed just before the content is delivered to the hardware device that will be used to play it.

30. Any developer can take advantage of the Secure Audio Path on Windows ME and Windows XP by using the WMF SDK to play content encoded in Windows Media format and protected with Windows Media DRM technology. RealNetworks has asked to be able to use the Secure Audio Path independently of the WMF SDK, but this is not possible in Windows ME and Windows XP since the Secure Audio Path was designed, developed and tested as part of the DRM technology in the WMF SDK. It would require additional development work for Microsoft to make Secure Audio Path a separate interface that could be called in a secure manner.

31. More specifically, the digital rights management technology in the WMF SDK does a secure handshake with the kernel components of Windows XP that provide a Secure Audio Path to hardware devices used to play DRM-protected content that is defined to require SAP. This Secure Audio Path is what prevents hackers using kernel debuggers or other clever software from intercepting the DRM- protected content on its way to the hardware device and stealing it. By definition, the WMF SDK and the kernel are both trusted components of the operating system, so there are no checking routines to ensure that software calling the Secure Audio Path is entitled to do so. Making the Secure Audio Path available outside the WMF SDK would require the creation of another level of interfaces that the WMF SDK and other software could call to gain access to the low-level interfaces to the Secure Audio Path, including a mechanism to ensure that the software calling the Secure Audio Path was entitled to do so. It would then be necessary to document those new interfaces so that third parties like RealNetworks could use them, and it would be necessary to define and publish a process whereby software developers could get a certification to use the Secure Audio Path such that the new interfaces would grant access.

32. As I have explained previously, we showcase new technologies in Windows Media Player by creating features for users. Then, as we figure out which of the new technologies ought to be part of the baseline of functionality for digital media applications generally, we enable use of the technology via low- level interfaces or interfaces to easy-to-use controls included in the operating system. Developers can then use those interfaces to add features to their applications and Web pages quickly and easily. That does not mean, however, that third parties like RealNetworks can select individual component features of technology for use in their products. The end-to-end technologies are not designed to permit individual component features to be used on a standalone basis. As implemented for Windows ME and Windows XP, Secure Audio Path is part of Windows Media DRM technology for files encoded in Windows Media format.

33. Based on the almost non-existent use of Secure Audio Path by content providers—who tend to value access to millions of PCs over higher security—the internal interfaces to Secure Audio Path has not yet reached the point where it would qualify as baseline functionality exposed in Windows for other developers to use. However, based on the requests for access to Secure Audio Path as a feature separate from Windows Media format and Windows Media DRM technology, and based on the need to comply with Section III.D of the Proposed Consent Decree for technology that will be used in the next version of Windows Media technology, for Service Pack 1 of Windows XP we have invested in the engineering work required to create and document APIs that expose Secure Audio Path as a feature separate from the Windows DRM technology. RealNetworks will be able to use this Secure Audio Path to further protect their proprietary media formats rather than re-implementing this capability on their own.

C. Play All Feature

34. I am aware that RealNetworks has raised issues about the Play All feature in the My Music folder in Windows XP. The Play All feature permits a user to select a group of media files and play all of them, rather than having to play them one at a time. All of the information that RealNetworks needed to take advantage of that Play All feature was available on MSDN before Windows XP was launched and was presented publicly at Microsoft’s Professional Developers Conference on October 24 to 28, 2001 Attendees were told how to register for the Play All feature and were pointed to an MSDN article on that topic that was already posted at that time. The fact that RealNetworks’ most recent media player called RealOne takes advantage of the Play All feature in Windows XP confirms that Microsoft has disclosed the necessary information.

35. The Play All feature uses the to determine which media player to launch. If a user has a folder of audio files encoded in the Real format and clicks the Play All button, the RealPlayer will launch automatically to play those files (assuming that the user has a version of the RealPlayer installed on his/her PC). 36. In Windows XP, there is a capability for media players to indicate that they are able to handle multiple launches of audio files at one time. This new capability corrects a serious problem in previous versions of Windows caused by media players locking up the operating system while trying to handle multiple file launches when they were incapable of doing so. Versions of Real Jukebox (prior to RealOne), MusicMatch, and Winamp all exhibited this problem or just failed to accept the multiple files. As I noted above, the latest version of RealPlayer, called RealOne, currently registers itself as capable of handling multiple file launches and thus works well in the Play All scenario. In order to prevent players which could not handle a multiple file launch from locking up the user’s computer, Windows XP presents a dialogue to the user if the user has selected more than 15 files and is trying to launch a media player that is not registered for multiple file launches. Since most media players can handle a few files, this solution enabled current media players to work normally unless the user selected a large number of files that might cause a problem.

37. If a media player is capable of handling multiple file launches, as Windows Media Player and RealOne both are, then the Play All feature will attempt to hand all of the selected files to that media player, assuming the media player is registered to handle at least some of those file types. In the case where several different media players are registered as capable of handling multiple file launches, then the media player associated with the first type of file encountered will be launched. This eliminates the risk that several media players will launch at one time and begin playing simultaneously, which would be frustrating and confusing to users.

38. When a folder has audio files in the Real format and in other formats such as MP3 or Windows Media format that have been assigned by the user to another media player, then the media player that is launched in the Play All scenario is determined by the first file type encountered. Since none of the market leading media players—Windows Media Player, MusicMatch, QuickTime and Winamp—other than the RealPlayer/Real Jukebox can play audio files encoded in the Real format, this can result in such files not being played by the media player that gets launched by the Play All feature. This is not, however, a common user scenario. Typically, if a user has audio files in the Real format and has the current Real Jukebox installed, then Real Jukebox is set as the “default” handler of all audio file types because Real Jukebox runs a background process by default that takes back file types anytime another application registers to handle one of those file types. If current versions of MusicMatch and Winamp are installed on the same system as Real Jukebox, it is possible that at a certain moment in time, Real Jukebox might not own a particular media file type since all three products run a background processes that continually reclaim media file types from one another—much to the dismay of consumers. However, some versions of MusicMatch and Winamp do not currently register for handling a multiple file launch, so Real Jukebox would get launched to play files in Real format while one of the other programs would launch to play MP3 or Windows Media files.

39. In summary, the issues raised by RealNetworks are spurious. The Play All feature was designed to provide a safeguard for consumers using media players not capable of taking multiple file launches while permitting media players—like RealOne—to inform Windows XP that they were capable of taking multiple file launches.

D. IE6 Media Bar 40. I understand that RealNetworks has also raised issues about the media bar in 6.0 (“IE6”), stating that Microsoft has not disclosed (i) how to implement a competing media bar, (ii) how to replace the existing media bar, and (iii) how to replace the Windows Media technology used by the media bar. I discuss these issues in the following paragraphs, but I want to emphasize at the outset that the IE6 Media Bar is an integrated feature of IE6 that provides user value. As such, it is not replaceable by third parties. Additionally, this integrated feature is not designed such that third-party technology can replace the media technology used by the IE6 Media Bar. However, it is possible—using IE technology that existed before Windows XP and that is fully documented on MSDN—for third parties to implement an equivalent or better media bar that consumers may choose to use.

41. The IE6 Media Bar is new feature that was designed to enable users to play audio and video while browsing the Web without launching a separate media player that would obscure all or part of the Web page being viewed. A screen shot showing the IE6 Media Bar in use appears below.

The feature works as follows. When a user clicks a hyperlink on a Web site to media of a type the Windows Media Player OCX can play, IE6 presents a dialogue box asking if the user wants to play the media in IE6. A screen shot of the dialogue box appears below.

The user is given the option of saying “yes” or “no” and is also given the option of having that preference remembered when media of the same type is encountered again while using IE6.

42. If the user answers the question “no” and elects to remember that preference, IE6 will not attempt to use the IE6 Media Bar again to play media of that type. If the user says “yes” and elects to remember that preference, then every time the user views media of that type in IE6, it will be played in the IE6 Media Bar. IE6 presents the dialogue box for every type of media it is capable of playing. The user’s choice of playing media of a particular type in the IE6 Media Bar has no effect on any choice the user has made about which software will be used to play that type of media outside of IE6. Thus, if the user has selected RealNetworks’ RealOne to play MP3 audio files, that choice will be honored in every context other than playing such MP3 files from within IE6 (and even then only if the user has chosen to use the IE6 Media bar to play MP3 files).

43. RealNetworks and other third parties are free to create their own media bars for use in IE6. As a proof of concept, a developer on my team has implemented a generic media bar which appears in the screen shot below. This media bar sample was developed using standard IE technology for creating generic “explorer bars” that existed before Windows XP was released and that is documented on MSDN. The screen shot shows a Web page with to three pieces of content in three different formats—a WMA file, an MP3 file and an RMJ file.

When the user clicks the RMJ file, the sample bar activates without any message to the user since the IE6 Media Bar does not play RMJ files. When the user clicks on the WMA or MP3 file, the IE6 dialogue will appear if the user has not already expressed a preference. Once the user chooses “no” to playing the content in IE6, then the sample media bar will launch. If the user had chosen to remember the preference, the sample bar would continue to launch. In the screen shot below, the sample media bar indicates the name of the file that has been passed to it. RealNetworks or any other developer could implement a media bar like this and then include a playback control.

44. While third-party developers cannot remove or replace the integrated IE6 Media Bar, they can offer a media bar that implements the same functionality for any type of media and can add an icon for their new media bar to the IE6 toolbar. RealNetworks already adds an icon to the IE toolbar and RealNetworks currently provides a type of explorer bar with links to Real content. The user can choose not to use the IE6 Media Bar and can choose instead to use a third-party media bar like the one provided by RealNetworks. Given the documented extensibility mechanisms in IE6, these third parties can generate the same (or better) functionality in their toolbars that Microsoft provides in the IE6 Media Bar.

45. It is true that other media players cannot register to take over the “Media” button in IE6 that displays the IE6 Media Bar. It is also true that other media players do not have access to the dialogue box displayed by IE6 when media types that can be played by the Windows Media Player OCX are encountered on a Web page. Those are integrated features of IE6 that enable playing media from within Internet Explorer rather than launching a separate media player. Such integrated features of IE6 are things users can choose to use or not use as they see fit.

46. IE6 was not designed so that integrated features that rely on the Windows Media Player OCX could use other media players instead, and there are good engineering reasons why that is the case. When a third-party plug-in for IE6 does not work, the user knows who to contact for help, i.e., the vendor that supplied the plug-in. When Microsoft creates an integrated feature of IE6, we have tested and made sure that it actually works. Permitting third parties to replace the software code that supports such an integrated feature is problematic because there is virtually no way for Microsoft to ensure that the replacement software code is going to work in the field as it is supposed to. And if it does not work, the user would probably contact Microsoft for help because the integrated feature was advertised as being a part of IE6. But Microsoft would not be able to help correct the problem because we would not know anything about the replacement technology. More broadly, if third parties can roll in underneath and change the software code that supports integrated features of Windows, Microsoft can no longer guarantee that the operating system will function as Microsoft intended. What used to be an integrated feature becomes just a link to software code that may or may not provide the requisite functionality.

E. Music Search Capability

47. I understand that RealNetworks has also complained that all versions of the Real format are not natively supported in Windows features like the music search capability in Windows XP. As an initial matter, I want to note that the Real format is not readily available to a broad range of developers— such as MusicMatch, Winamp or Kazaa—to play in their applications, and Microsoft does not typically provide native support in Windows for formats that only one company uses. Windows provides native support for general use formats such as JPEG that are widely available to developers. To date, RealNetworks has elected to enable primarily its media player to play content encoded in the Real format. In contrast to the Real format, all major media players can play the Windows Media format and all major media editors can edit content in the Windows Media format.

48. In any event, the behavior of the music search capability in the Windows XP is not as RealNetworks describes it. That media search capability looks for a variety of audio file types, including two popular RealNetworks files types, namely those with the .ra and .ram file extensions. RealNetworks created a new file extension called .rmj well before the commercial release of Windows XP. RealNetworks did not inform Microsoft during extensive beta testing of the new operating system that the .rmj file extension was not being picked up by the media search capability in Windows XP. Microsoft has modified the media search capability in Windows XP to include the new .rmj file extension, so the issue has been resolved. Additionally, Microsoft asked RealNetworks to identify any other file types that should be included. As of today, RealNetworks had not identified any additional file types. A copy of the email message asking RealNetworks to identify additional file types is annexed hereto as Defendant’s Exhibit 1592.

F. Default Choice of Media Player

49. I am aware that RealNetworks has raised the issue that Windows XP overrides user choices concerning which media player will play various types of media by default. The Windows Media Player is designed to be passive during an upgrade to Windows XP with regard to the takeover of all current types of media, including (“WMA”) and (“WMV”) files, MP3 files and MPEG files. If one of these types of media is not owned by Windows, Windows Media Player will leave that setting intact. In contrast, Real Jukebox Plus, RealOne, MusicMatch and Winamp all run silent processes in the background that reclaim all types of media they are capable of playing at specified intervals without informing the user what they are doing at the time they are taking over the file and, thus, without giving the user any choice in the matter. While it is true that all of these media players have some way of opting out of this behavior during setup, running a silent process to reclaim media file types is their default behavior. Windows Media Player does not run a process in the background to reclaim media file types. 50. In the particular scenario where a consumer is upgrading from Windows ME or Windows 2000 to Windows XP, Windows XP checks the Windows Registry to see which media player owns which current types of media and preserves those on the new operating system. Thus, for example, if MusicMatch is installed on Windows 2000 and is registered as the owner of WMA and WMV files and MP3 files, those setting will be left that way once Windows XP is installed.

51. Microsoft intended Windows XP to be passive with regard to the takeover of all file types during upgrade and during the creation of new user accounts on a single machine —such as those one would create for multiple family members using the same machine. Unfortunately, after the operating system was commercially released, we discovered a bug that causes the Windows Media Player to take over legacy file types that have traditionally been owned by Windows during an upgrade. Ownership of current file types—MP3, WMA, WMV, MPEG—is maintained, but the legacy files are taken over. These include AVI and WAV files. Additionally, we discovered a bug that, in a complicated scenario that requires the user account defined during the installation of Windows XP to take over at least one file type in the Windows Media Player, causes Windows Media Player to take over all of the types of media it is capable of playing when a new user account is created after the Windows XP setup is completed. Both of these bugs are being fixed in Service Pack 1 of Windows XP.

G. Autoplay Issues

52. I am aware that ReaNetworks has raised issues with respect to autoplay of CDs in Windows XP. RealNetworks claims that Microsoft did not include the default player for audio CDs in the autoplay dialogue for a CD containing MP3 files and that Microsoft did not disclose how to add a player to the list in the autoplay dialogue until several months after the release of Windows XP. Both of these statements are inaccurate. First, Microsoft publicly disclosed documentation concerning autoplay functionality in Windows XP and the mechanism for registering to appear in various autoplay lists at the 2001 Professional Developers Conference I referred to earlier. Attendees were told how to register their players to appear in autoplay lists and were pointed to the MSDN article on that subject that had already been posted. Windows XP was launched on October 25, 2001, so the documentation was available at that time. Second, a CD that contains MP3 files is not a standard Redbook audio CD and thus does not trigger the appearance of the default player for audio CDs in the autoplay dialogue. Such a CD is a removable storage device with music files on it. Thus, it triggers the autoplay list for removable storage device. As noted above, Microsoft documented how to add a player to the autoplay list for devices.

53. RealNetworks has also stated that Microsoft has not yet disclosed how to enter a competing player at the top of the autoplay list. Microsoft has documented and explained that players appear on the autoplay list in the order in which they were registered for the list. Thus, on a new computer on which Windows XP was installed by the OEM, the Windows Media Player will be at the top of the autoplay list because it was registered first. However, Microsoft is addressing this issue in Service Pack 1 of Windows XP. As modified, the order in which players appear on the autoplay list will continue to be based on the order in which they were registered. However, when a new player registers to be added to the list, the next time the autoplay dialogue is presented that new player will be selected and scrolled into view for the user. This provides visibility to the new player and also enables the user to easily select that new player from the autoplay list. 54. I am also aware that RealNetworks has raised several issues with autoplay interfering with the Create CD function of Real Jukebox. Note that RealOne does not exhibit any of the issues that show up with the older Real Jukebox, indicating that RealNetworks used the documented functionality of Windows XP to address those issues. RealNetworks states that when a user running Real Jukebox selects Create CD and then inserts a blank CD in his/her PC running Windows XP, that the autoplay dialogue launches and interferes with the Create CD function at several points in the process. Autoplay enables software that is currently running to hold off the autoplay dialogue and prevent it from appearing. This allows the consumer to launch his/her software of choice and then to initiate a Copy to CD process within that software without seeing the autoplay dialogue. RealNetworks can use this feature of autoplay to prevent the autoplay dialogue from launching while the user is using the Create CD function of Real Jukebox. This standard mechanism to hold off autoplay was documented and disclosed on MSDN and at the 2001 Professional Developer Conference described above.

55. Additionally, RealNetworks indicates that the autoplay dialogue leads the user to the CD Writing Wizard which cannot create an audio CD from files encoded in Real format. As noted above, Real Jukebox can hold off this autoplay dialogue when the user is in the middle of using Real Jukebox. Secondly, Real Jukebox can register to be included in the blank CD autoplay so that Real Jukebox is a choice for users when they are not running Real Jukebox. The mechanism for registering was publicly disclosed on MSDN and at the Professional Developers Conference as described above.

56. Finally, RealNetworks raises the issue that once the user has completed the Create CD function in Real Jukebox, the autoplay dialogue for media insertion launches and interferes with the user experience. As described above, Real Jukebox can hold off this dialogue by following the publicly- available documentation for Windows XP.

57. RealNetworks claims that if Microsoft had disclosed information about Windows XP earlier, RealNetworks could have either corrected its products in the field or asked Microsoft to change the way the feature worked in the operating system. But RealNetworks was on notice of the things it is complaining about now long before the launch of Windows XP because the functionality was exposed in the final test versions of Windows XP referred to as release candidates. RealNetworks received those release candidates for testing, and was free to modify its products to make them compatible with Windows XP.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on April 25, 2002 in Redmond, Washington.

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Linda Wolfe Averett