Microsoft May Lose South Korean Market

Microsoft says it may be forced to withdraw its Windows software from the South Korean market if the country’s antitrust agency orders it to unbundle its instant-messaging application and media player from the operating system.

South Korea’s Fair Trade Commission (KFTC) has reportedly been investigating charges that Microsoft has breached antitrust laws by bundling streaming video and instant messaging into Windows software.

“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,” Microsoft said in a U.S. regulatory filing late Thursday.

A Microsoft spokeswoman said the software maker had an obligation to make the disclosure under U.S. securities laws as part of its 10Q filing of its quarterly financial statements to the Securities and Exchange Commission.

“We want to reiterate our strong commitment to the Korean market, our many partners in Korea, and, most of all, our Korean customers,” she said in an e-mail to internetnews.com. “We were an early entrant to the Korean market, have built a large business, and want to continue to invest in the market to bring new and exciting technologies to Korean consumers.”

The KFTC probe was launched in 2001 and later expanded in 2003 when RealNetworks filed a complaint.

Earlier this month, Microsoft settled a similar antitrust lawsuit with RealNetworks for $761 million.

That deal ended a two-year-old lawsuit that accused Microsoft of abusing its monopoly to limit choice in digital media players, hurting distribution of RealPlayer.

As a part of the deal, RealNetworks dropped its suits in South Korea and Europe.

In March 2004, the European Commission levied a record fine of $613 million and imposed other penalties against Microsoft. After ruling the company abused its monopoly position, it required it to unbundle its Windows Media Player software from Windows in European markets.

Microsoft said it will continue to cooperate with the KFTC until it reaches a conclusion in the matter.