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October 31, 2005

Microsoft Korea Kerfuffle

Posted by David Hunter at 9:34 AM ET.

In last week’s Microsoft 10-Q report to the SEC reporting 1st (fiscal) quarter results there was the following note:

The Korean Fair Trade Commission (“KFTC”) has been investigating whether our inclusion of streaming media technology or instant messenger technology in Windows, or the inclusion of Windows Media Services as an optional component of Windows Server, violates the Korean Fair Trade Law. The KFTC has been conducting hearings periodically since July 2005. The KFTC could enter a remedial order that could bar us from offering a version of Windows in Korea that included media or messenger technologies or bar us from offering Windows Server with Windows Media Services as an optional component. If the KFTC enters an order requiring Microsoft to remove code or redesign Windows uniquely for the Korean market, it might be necessary to withdraw Windows from the Korean market or delay offering new versions in Korea unless the remedial order is stayed or overturned on appeal.

While for established companies, there are meager benefits to being less than apocalyptic in financial report notes, this was unexpected and created a predictable furor:

The KFTC began its probe in 2001 when South Korean Internet portal Daum Communications Corp. alleged Microsoft’s bundling of the operating system with other services broke antitrust rules. It widened the probe following a similar complaint from RealNetworks in 2004.

A ruling could come as soon as Wednesday, a KFTC spokesman said.

“No matter what Microsoft does, we will proceed with our deliberation and discuss it again at a plenary session on Wednesday,” Lee Tae-hwi said by telephone. “There is no change in our stance to fight unfair business practices.”

Korea reportedly accounts for less than 1% of Microsoft revenue.

Filed under Antitrust, Financial, General Business, Governmental Relations, Legal

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One Response to “Microsoft Korea Kerfuffle”

  1. Microsoft folds in Korean antitrust case -- Microsoft News Tracker Says:

    [...] While certainly less satisfying than the talk of stopping Windows shipments in Korea, this settlement seems based on an accurate calculation of cost versus benefit. If Microsoft is going to enhance its dominant PC operating system by bundling software applications, it is not surprising that third party vendors of similar applications will run crying to their local antitrust regulators. All it ever seems to cost Microsoft is an occasional fine and goofy unbundled version of the operating system, so it’s just a cost of doing very good business.   Filed under OS – Client, Windows XP, Windows Vista, Legal, Governmental Relations, General Business, Antitrust, Microsoft   [Permalink] [TrackBack] [...]

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