Microsoft fined $32 million
South Korean regulators ruled Wednesday that US software giant Microsoft abused its market dominance and violated fair trade rules, fining the firm 33 billion won ($32 million).
Microsoft was also ordered to remove parts of bundled software from its Windows operating system, the Fair Trade Commission (FTC) said.
The US company denies any wrongdoing and said it would appeal the commission’s ruling.
"We intend to appeal this decision because it is inconsistent with Korean law," it said.
Microsoft has insisted that users of its Windows XP platform have the option to use the instant messenger system as installed or not.
However, the FTC said the US company had violated rules on fair competition and ordered Microsoft to separate its instant messenger and Media Server programs from its Windows operating system within 180 days.
"Microsoft’s bundling practices limited fair market competition, with its monopolization hurting the interest of consumers," FTC chief Kang Chul-Kyu said.
Microsoft was also ordered to sell two versions of its Windows operating system – one without the Media Player and MSN messenger programs, and another bundled with the two programs, he said.
The order, based on advice from foreign experts, will remain in force for more than 10 years after which Microsoft may ask for a review.
Microsoft said the commission’s move could have the effect of "chilling innovation" in South Korea.
"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," it said.
Kang dismissed Microsoft’s claim saying the commission’s move would accelerate competition in the domestic software industry and give consumers a freer choice.
"We hope Microsoft will be aware of its responsibility as the world’s largest software company and make efforts to ease the inconvenience and dissatisfaction of its clients," Kang said.
Microsoft has spent billions of dollars to settle a string of disputes brought by major rivals including IBM and Sun Microsystems in the United States, South Korea and the European Union.
In October, the firm agreed to pay 761 million dollars to RealNetworks, a US firm marketing the "RealPlayer" audio-visual software.
The US company also sealed a $30 million deal with South Korean Internet portal Daum Communications last month.
That deal ended a legal battle with Daum which had accused Microsoft of violating anti-trust rules by unfairly incorporating its MSN instant messaging software into the Windows system.
That settlement did not affect the FTC’s ruling on abuse of its monopoly.
The European Commission has already ruled that the US company should sell its Windows system without its Media Player software to ensure fair competition with European rivals.
Microsoft said the commission’s decision would not stop the company from developing products for South Korean consumers.
"Microsoft has long felt that Korea is an important centre of innovation for our industry. We remain committed to Korea and look forward to continuing to serve the interests of Korean consumers as well as the rest of the Korean information technology industry," it said.
The US company said its integration of instant messaging and media player had created "great value" for consumers and opportunities for South Korean developers who write applications that run on Windows and create devices for Windows.
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