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.
