Microsoft, Real face 'spyware' probe

The EU is investigating whether Microsoft and Real Networks are violating European Union consumer privacy laws

LONDON, England (CNN) -- Microsoft and U.S.-based Real Networks stand accused by EU privacy regulators of spying on consumers downloading music using their software.

Brussels is investigating whether music player software which automatically sends information to a user's PC is in fact -- under European Union law -- an act of consumer espionage.

It's being referred to as "spyware."

European consumers have more control over how information about them is used than those in the United States. And the regulators argue that any company doing business in the region must comply with EU privacy laws.

"EU citizens need to be protected under EU data protection law, and therefore what they are trying to say is that if you collect personal data and process personal data about European citizens, no matter where your company is based in the world, you are still subject to data protection laws in the EU," says Eduardo Ustaran of the London-based law firm of Berwin Leighton Paisner.

When you download Real Networks software onto your PC, you are greeted with a long legal introduction to the licence and your rights and obligations.

As you move further into the programme you are asked to nominate your preferences in news, music and entertainment.

But regulators argue that buried in the software are cookies -- those invisible files which keep track of how users navigate Web sites. They contain a wealth of personal information.

If you're concerned about privacy, you can ask for more information on the Real Networks site by sending an e-mail.

Lawyers say companies are keen to maintain good customer relations with clients -- even at the expense of valuable consumer information.

"Companies of this size and this reach, their main fear will always be public opinion and how they are perceived by the general public," says Ustaran. "If the public think they are dealing with companies which are very 'Big Brotherish,' there is an element there which has an impact on the way they operate."

For its part, though, Microsoft is even questioning the EU's jurisdiction over the use of cookies in its software and says it will test the boundaries of EU legislation.