Microsoft Loses S. Korean Antitrust Ruling

South Korea's Fair Trade Commission has ruled Microsoft must pay a $32 million fine and ship two alternative Windows versions for abusing its market dominance.

South Korea’s Fair Trade Commission has ruled that Microsoft abused its dominance in the computer operating system market (PDF), and ordered the company to ship two alternative versions of Windows in the country within 180 days: one without Windows Media Player and instant messenger, and another with a new “Media Player Centre” and “Messenger Centre” which contain links to competing products.

Microsoft has said it will fight the decision in court. Microsoft has previously threatened to withdraw Windows from the South Korean market if the KFTC found the company in violation of Korean antitrust rules.

The decision comes after Microsoft settled separately with both RealNetworks (for $761 million) and Daum Communications (for $30 million), the companies which initially brought antitrust allegations against Microsoft. Despite the withdrawal of the original antitrust complaints, the KFTC continued its proceedings, finding Microsoft’s bundling of Windows Media Player and instant messaging technologies with the Windows operating system unfairly excluded competitors and harmed consumers.

South Korea’s corrective measured would remain in place for 10 years; after 5 years, Microsoft would be granted an annual opportunity to review the conditions of the remedy in order to adjust for changing market conditions.

In early 2004, the European Union ordered Microsoft to pay $586 million in a similar antitrust case and produce a version of Windows without Windows Media Player. Microsoft is currently appealing that ruling, and reports indicate adoption of the special EU version of Windows (dubbed Windows XP N) has been tepid, although Microsoft itself doesn’t separate out sales figures.