Microsoft said it will appeal an antitrust decision reached by
the Korea Fair Trade Commission (KFTC) Wednesday.
The consumer protection agency found the Redmond, Wash., software
giant and Microsoft Korea abused its dominant market position when
it bundled Windows Media Player (WMP) and MSN Messenger to the
Windows operating system, as well as Windows Media Services to the
Windows Server operating system.
The KFTC is fining Microsoft nearly $32 million and ordering the
company to un-bundle the software from its operating system within
the next six months.
The KFTC ruled that Microsoft practices have eliminated
competition and exacerbated its monopoly position in the media
server, media player and instant messaging markets.
The ruling added that the practices raised the entry barrier of
the tying product market, specifically Windows Server and PC
operating systems, which led to restriction of market competition
and obstruction of consumer welfare.
The ruling urges Microsoft to "bear in mind that its market
position asks for a corresponding responsibility."
Regulators told Microsoft it has 180 days to un-bundle WMS from
the Server operating system for its violations of the Monopoly
Regulation and Fair Trade Act.
Furthermore, the company is required to ship two different
versions of Windows in the next six months: one version stripped of
WMP and MSN Messenger and a second with a "Media Player Centre" and
"Messenger Centre" with links to competing services, with the
competing services to be determined by a supervisory board.
Microsoft will also need to send existing South Korean Windows
users a CD with Media Player Centre and Messenger Centre, or provide
the new software as an Internet update.
The software giant disagreed with the ruling, maintaining the
company operated within Korean law, and it intends to appeal the
"Microsoft's integration of instant messaging and media player
functionality in Windows has created great value for consumers and
opportunities for Korean developers who write applications that run
on Windows and create devices for Windows," a statement by Microsoft
"Competition in these technologies in Korea has been, and remains
vibrant with many new Korean companies successfully offering digital
media and instant messaging choices for Korean consumers," the
statement continued. "This decision could have the effect of
chilling innovation in Korea."
South Korean authorities pointed to numbers that showed a jump in
Microsoft's market share in media software after it bundled the
software to its operating system, which has 99 percent market share
in the country.
Before bundling, Microsoft's WMP market share in December 2000
was 39 percent compared to Real Network's 37 percent. After it
was bundled with the Windows OS, WMP's market share jumped to 60
percent, while Real sunk to 5 percent.
Authorities also saw the market share on local instant messaging
(IM) services Daum Messenger and Nate-On Messenger drop after MSN
Messenger was bundled with the OS.
Microsoft's bundling practices have landed the company in trouble
throughout the world.
Last year, the European Union Competition Commission ruled
Microsoft stifled competition bundling WMP with the operating system
and imposed a $613 million fine.
Microsoft filed an appeal to that decision, as well.
The U.S. Department of Justice settled antitrust charges against
the company in November 2001 for its bundling practices, though the
agreement ultimately didn't prevent Microsoft from tying its
software to the operating system.