According to the Korea Fair Trade Commission (KTFC), Microsoft
acted in breach of competition rules by tying its media service and
media player to the Windows server and PC operating systems.
In December 2000, just after the tying had taken place,
Microsoft and RealNetworks, its main rival in streaming media,
controlled 39% and 37% respectively of the Korean market, according
to the regulator. But recent figures show that Microsoft now holds
over 60% of the market while RealNetworks’ share has dropped to
5%.
The KFTC also found that Microsoft tying its instant messaging
programme to Windows also breached Korean competition rules.
The regulator has given Microsoft 180 days in which to unbundle
its Media Service from the Windows server operating system. The
software giant also has 180 days in which to offer two versions of
the Windows PC operating system.
One of these will be entirely stripped of the media player and
instant messaging software, while the other will contain a “Media
Player Centre” and “Messenger Centre,” linking to web pages that
allow competing products to be downloaded.
Microsoft will also be obliged to send CDs or internet updates
containing these links to Korean customers who own the existing
version of Windows.
These obligations will remain in force for 10 years, but after
five years Microsoft will be entitled to seek a review of the
measures.
The KFTC has also imposed a fine on Microsoft, amounting to
27.92 billion won (around £15 million). It has yet to determine a
fine to cover the 2005 accounting period, but expects that the
total fine will be in the region of 33 billion won (around £18
million)
Microsoft expressed disappointment with the finding and
announced its intention to appeal.
“We disagree with the Commission’s decision and strongly believe
that Microsoft has operated within Korean law,” it said in a
statement.
The South Korean ruling complements a March 2004 EU Commission
finding that Microsoft had leveraged its near monopoly in the EU
market for PC operating systems onto the markets for work group
server operating systems and for media players.
As a sanction, the Commission ordered Microsoft to disclose to
competitors the interfaces required for their products to be able
to "talk" with the ubiquitous Windows operating system.
Microsoft was also required to offer an alternative
stripped-down version of Windows to PC manufacturers and when
selling directly to end users and it was fined €497 million for
abusing its market dominance in the EU.
Microsoft is also appealing the EU ruling.
