South Korea Orders Windows Changes

A South Korean government agency has ruled that Microsoft violated trade laws by shipping a digital media player and instant messaging client in the Windows client OS and by shipping digital media streaming functionality with Windows Server. The government has fined Microsoft US$32 million and ordered it to ship modified versions of Windows XP and Windows Server within 180 days; Microsoft is appealing. Although the ruling will have little financial impact on the company, it could encourage competitors to prompt government agencies around the world to investigate Microsoft’s bundling practices.

Four-Year Investigation

The Korean Fair Trade Commission (KFTC) began investigating Microsoft for trade violations in Sept. 2001 after a complaint from Daum Communications, a South Korean ISP and Web portal. Daum said that Microsoft’s inclusion of Windows Messenger instant messaging (IM) software in Windows XP would hurt the market for Daum’s stand-alone IM client. In 2004, RealNetworks filed a similar complaint, alleging that the RealPlayer’s market share in South Korea dropped precipitously after Microsoft began bundling the Windows Media Player with Windows ME in 2000. RealNetworks also asked the KFTC to investigate Windows Media Services, a component of Windows Server that allows companies to host and stream digital media files over networks to end users.