Microsoft Corp. has reached a $30 million settlement with South Korea’s Daum over an antitrust suit, but regulators will continue to review their case against the world’s largest software maker.
The deal ends a legal battle with Daum, which had accused Microsoft of violating anti-trust rules by unfairly incorporating its MSN instant messaging software into the Windows system. Microsoft and Daum issued a joint statement saying the deal would include putting "select online content from Daum on MSN and other marketing and promotional opportunities."
The settlement includes a cash payment of $US10 million, together with an advertising commitment valued at $US10 million and another $US10 million in business terms.
In return for dropping its suit Daum, which has its own messaging service, decided to tie up with Microsoft.
Shares in Daum Communications Corp., the country’s top Web portal operator, jumped nearly 9 percent on after the two firms announced the agreement.
We have decided to drop all complaints against the US Company, Daum spokesman Park Hyun-Jung said. She refused to elaborate on the business ties with Microsoft.
Analysts say the payment would alleviate a cash shortage at Daum, which acquired Lycos Inc. last year and has been suffering heavy costs linked to restructuring efforts at the U.S. portal.
It is quite a lot of money for Daum, although the agreement will have little impact on its fundamentals or Microsoft’s dominance in the Korean market, said Lee Wang-sang, an analyst at Woori Investment & Securities.
Daum, which claims 55 million users, mostly in South Korea but also in the United States, China and Japan, said it would drop its 2004 lawsuit against Microsoft in South Korea and withdraw its 2001 complaint lodged with the local antitrust watchdog, the Fair Trade Commission.
The deal came a month after Microsoft agreed to pay $US761 million to RealNetworks, a US firm marketing the "RealPlayer" audio-visual software, in a deal that settled antitrust suits in the United States, South Korea and the European Union.
However, South Korea’s watchdog said its review of allegations of unfair business practices by Microsoft Corp. would continue despite the settlement.
The complaint by Daum was used as evidence for the broader case against Microsoft, the Fair Trade Commission said in a statement. The withdrawal of Daum’s complaint will have no impact in proceeding with the review of the Microsoft case.
The deals will not affect our ruling. We will go ahead with our deliberations on charges brought against Microsoft, said Lee Hwang, an investigator at the Fair Trade Commission.
A Microsoft official said the U.S. Company would work closely with the commission.
The resolution and agreement we made with Daum will not necessarily have any impact on the KFTC investigation, Oliver Roll, general manager for Microsoft’s marketing in Asia Pacific, said by telephone.
We believe we have put a strong case forward with the KFTC. We hope the KTFC officials will take our evidence into account, he said, adding a ruling was expected within the next few weeks.
The commission began its investigation in 2001 when Daum complained Microsoft had breached antitrust rules by incorporating its Instant Messenger and Media Player services into the Windows operating system. The commission broadened its probe following a similar complaint from RealNetworks Inc. in 2004.
RealNetworks dropped its suit in South Korea after Microsoft agreed in October to a $761 million settlement with the U.S. firm, which provides RealPlayer software.
Microsoft has insisted Windows XP users have the option to use the instant messenger system as installed or not to use it. It has said it could appeal the commission’s ruling.
Most computer manufacturers in South Korea package their products with Windows XP as their base operating system.
The European Commission has already ruled that the US Company should sell its Windows system without its Media Player software to ensure fair competition with European rivals.