The first fight in the development of media delivery on the Internet was over the desktop: Which company's player would become the one that Web surfers first turn to when they download a video from the Internet? RealNetworks took the early lead in that battle, but Microsoft, with its Windows monopoly and mountains of cash, was not far behind. According to the generally accepted history of how the industry developed, the two firms, whose headquarters are just miles from each other, were soon attempting to pound each other out of existence.

Lang disputes that history. Far from being arch rivals, Microsoft and RealNetworks had an understanding with each other, Lang contends -- they would compete, but they wouldn't play too rough. The companies would divide the market, and small companies like Burst would be kept out. This deal, Lang alleges, allowed Microsoft to kill off Burst, causing Burst to beg Microsoft to license the firm's technology. And when Burst opened up its technology to Microsoft's executives, Microsoft took very close notes -- and, Lang says, the burst technology eventually ended up in Microsoft's software.

RealNetworks showed up on Microsoft's radar in the late 1990s, when Real's head start in streaming appeared to be giving it a lead in multimedia that Microsoft didn't appreciate. According to the findings of fact issued by the federal district court in D.C. as part of the Justice Department's antitrust trial against Microsoft, Microsoft saw RealNetworks as a threat to its way of doing things.

"At the end of May 1997, [Bill] Gates told a group of Microsoft executives that multimedia streaming represented strategic ground that Microsoft needed to capture," those findings state. "[Gates] identified RealNetworks as the adversary and authorized the payment of up to $65 million for a streaming software company in order to accelerate Microsoft's effort to seize control of streaming standards. Two weeks later, Microsoft signed a letter of intent for the acquisition of a streaming media company called VXtreme." (The complete findings, which run a breezy 103 pages and from which Burst.com quotes liberally in its complaint, are available here.)

"At this time," Lang says, "the battle for the desktop was on." But his company's strategy for creating its own desktop player quickly fizzled. Burst had built its media player on the Java Media Framework, which Intel had been working with Sun to develop. The JMF, as it's called, was to be a cross-platform player that would play a variety of media formats -- a prospect that Microsoft saw as a threat to the Windows platform. Intel's support for the player was frequently described as a being a sore point between Microsoft and the chipmaker, and in 1997, according to the findings of fact, Microsoft and Intel entered into a deal that led Intel to drop support for the system.

It's probably a stretch to say that Microsoft wanted Intel to drop support for the JMF as a way of specifically hurting Instant Video Technologies. (According to the findings, it was a way of hurting Sun, the main developer of the Java programming language.) It's not clear that Microsoft even knew of Lang or his company at the time, but Intel's move had the effect of crippling Lang's firm anyway. Burst had worked closely with Intel's Java developers, and now that they were "dropping us," as Lang puts it, Burst saw no choice but to abandon its dream of creating a media player. Instead, Lang says, the firm now focused on creating a plug-in to let bursting work on other players.

And for a while, the plug-in idea worked well, Lang says. The plug-in that Burst created for Microsoft's Windows Media player enabled Windows users to get video that looked better than that delivered with Windows Media alone, and it transferred video more efficiently over the network, saving about 25 percent of bandwidth over streaming video.

Lang says that Burst's technology had become good enough that U2 decided to offer its summer 2000 PopMart concerts for free on the Web using Burst's software. In the first six months of that year, Burst made $500,000 in software sales, and it raised $12 million in investments, including $5 million from the phone company SBC. Even Microsoft was taken with the company's technology -- it invited Burst to participate in Microsoft's booth at the National Association of Broadcasters show that year in Las Vegas.

And then suddenly, Lang says, Redmond soured on Burst. Shortly before the U2's concert tour was to begin, Microsoft released Windows Media Player 7 -- and, to Lang's horror, Burst's engineers discovered that the new player didn't support Burst's plug-in.

"They made changes to their code that only affected Burst," Lang says. In its complaint, Burst says that it had "long and frustrating discussions with Microsoft to establish workarounds or other fixes, but Microsoft strategically used its power to disadvantage and delay Burst." As a result, everyone who downloaded the new player couldn't watch the U2 concerts, and Burst was deprived of the first major "showcase" of its technology.

Was the new Microsoft player's incompatibility with Burst accidental, or intentional? Was its timing coincidental, or calculated? According to Lang and his attorneys, the changes Microsoft made to the Windows Media Player were so tiny that they seemed designed to stymie Burst: "It was a surgical change," Lang says. (In its legal response to Burst's filing, Microsoft explained away this "surgical change" by stating: "As a matter of law, Microsoft has no obligation to deprive its customers of technological improvements in order to help its competitor Burst.")

Bruce Wecker, one of Burst's attorneys, concedes that not all of the facts are available yet to prove that what Microsoft did was deliberate. "Because we haven't had discovery in the case yet, we're at a phase where we don't know all they did," he said. If the case comes to trial, said George Frost, another attorney in the case, "we can put their engineers under oath."

End of Part 1. Tomorrow, in Part 2, Burst.com shows Microsoft its "special sauce" under a nondisclosure agreement. Less than a year later, Microsoft's streaming technology looks a lot like Burst's. Read Part II.

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