Aug. 25 (Bloomberg) -- The European Commission extended its investigation into Microsoft Corp. and Time Warner Inc.'s agreement to control ContentGuard Inc., a U.S. maker of antipiracy software.

``The companies have been informed the commission has seen the need to start an in-depth investigation into this joint acquisition,'' commission spokeswoman Amelia Torres told a Brussels news conference.

The commission, the European Union's competition watchdog, said that concessions offered by Microsoft and Time Warner earlier this month to try and overcome antitrust obstacles to their purchase were insufficient. The extended EU probe can take four more months and the new deadline for a decision is Jan. 6.

At stake are attempts by Microsoft and Time Warner to set an industry standard for the software used to prevent illegal copying of music and films over the Internet, one of the main components in legal download services such as Apple Computer Inc.'s iTunes Music Store, the most popular. The U.S. online music market may grow to $1.7 billion by 2009 from $270 million now, according to industry analyst JupiterResearch.

Redmond, Washington-based Microsoft, the world's largest software maker, and New York-based Time Warner, the world's largest media company, agreed in April to buy Xerox Corp.'s stake in ContentGuard. The transaction's value wasn't disclosed. Xerox reported earnings of $83 million from selling most of its stake.

Bethesda, Maryland-based ContentGuard's technology allows record labels, film distributors and other media companies to control how consumers use downloaded documents, audio or video or to ensure royalty payments for the content.

The new owners have said they'll continue licensing patents held by ContentGuard. Competitors, customers and content providers expressed concern that the companies could drag out issuing patents for years and stymie development of alternative technologies.

Under EU rules, the commission has six to eight weeks after extending an investigation to send a statement of objections to a company. The commission sends statements of objections in about 80 percent of its in-depth, or second-stage, investigations.

To contact the reporter on this story: Robert McLeod at

Last Updated: August 25, 2004 06:32 EDT