Korea to hear Microsoft competition case

A Korean government antitrust committee will hear arguments Wednesday into whether Microsoft violated unfair competition laws.

A Korean government antitrust committee will hear arguments Wednesday into whether Microsoft violated competition laws by bundling programs with its Windows XP operating system.

Daum Communications, a Korean company that runs a popular Web portal and has its own instant messenger software, filed a complaint with the Korea Fair Trade Commission (KFTC) in September 2001. The company alleges that Microsoft abused its strong market position by tying Messenger with Windows XP, causing unspecified losses.

"It is unfair for customers who should be able to evaluate and purchase products after their own comparisons," said Daum spokeswoman Park Hyun-jung Friday. "Microsoft already has 90 percent of the market share [for operating systems] in Korea."

Daum alleges the market share for its messenger, called "Touch," dropped from 20.3 percent market share in August 2001 to 6.4 percent by April 2003. The company also alleges Microsoft's share rose from 29.4 percent to 75.5 percent over the same period.

RealNetworks, the developer of RealPlayer, also filed a complaint with the commission in October 2004 over Microsoft's combination of its Media Player and Media Server programs with Windows.

The hearing in South Korea will address the software issues raised by both companies, according to Hwang Lee, senior investigator for the Microsoft Task Force. Nine commissioners on the KFTC will hear opening remarks from its own investigators and Microsoft representatives. Members include the commission chairman and vice chairman plus economics professors and a lawyer, Hwang said.

"Microsoft's improvement of its products over time has had a beneficial effect on the IT industry and consumers, and is fully compliant with Korea's laws," said Chan Kwon, the company's Seoul-based spokesman. "We look forward to presenting our position to the commissioners and are confident that we will ultimately prevail."

The commission will not hear from representatives from Daum or RealNetworks, Hwang said. The two parties are only responsible for initiating the complaint, and they do not have another legal role, he said.

The commission is unlikely to make a final ruling that day; it's more likely an additional hearing will be scheduled for August or September, Hwang said. Although it's been nearly four years since Daum filed its complaint, Hwang said the time gap is not unusual given the complexity of the case.

"We needed to take account the cases in the United States and the European Commission," Hwang said. "We developed this case very fast since the beginning of last year."

The European Commission, the E.U.'s executive body, ordered Microsoft in March 2004 to sell a version of Windows XP without the Media Player software, as it determined the company gained an unfair advantage over products from RealNetworks and Apple Computer. Last month, Microsoft began distributing a modified version of XP without Media Player in compliance.

"We are happy to hear that they [the KFTC] are now making a decision," Park said. "Daum hopes that the case of European Union affects the decision of the Fair Trade Commission."

At the end of March, KFTC investigators forwarded the case to the commission, Hwang said. A decision by the commission will be legally binding and could set a legal precedent.

In April 2004, Daum filed a 10 billion won (US$9.6 million) civil lawsuit, alleging that Microsoft was abusing its market dominance by shipping Windows XP with messenger software. Two hearings have been held in that case, but a next hearing has not been scheduled, Park said.

Hwang said it would be at the discretion of a judge on how the KFTC's decision would affect another lawsuit.

While most of the computers sold in Korea feature a Korean-language version of Windows, South Korea is one of several countries supporting a switch to open-source Linux-based platforms. Microsoft has sporadically come under attack in Korea over price concerns about its software.

In March, the South Korean government pledged 3 billion won in support for government agencies that switch to open-source platforms. Already, about 190 schools have changed their systems to Buyeo, the Korean version of Linux, under a program called the New Education Information System.

Last year, the government actively lobbied eight government ministries to change their systems. Supporters say they can save money by using open-source platforms, and systems can be improved, as all programmers can tweak its code.

In March, Microsoft announced it will invest US$30 million over the next three years in a research and development lab in South Korea, marking the first time such a facility has been set up outside the U.S. The center will focus on developing mobile telecommunication technology. Last year, Microsoft pledged to spend US$8.7 million on computer education at Korean universities.

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