US assails Korean judgment against Microsoft

The U.S. Department of Justice (DOJ) said Wednesday that South Korea's Fair Trade Commission (FTC) went too far in an antitrust judgment against Microsoft Corp.

The judgment, in which the Korean agency fined Microsoft 33 billion won (US$32 million) and ordered it to offer two different versions of Windows in South Korea, among other remedies, could stifle innovation and harm consumers, the DOJ's Antitrust Division said in a statement.

"The Antitrust Division believes that Korea's remedy goes beyond what is necessary or appropriate to protect consumers, as it requires the removal of products that consumers may prefer," said a statement attributed to J. Bruce McDonald, deputy assistant attorney general for the Antitrust Division. "The Division continues to believe that imposing 'code removal' remedies that strip out functionality can ultimately harm innovation and the consumers that benefit from it."

The FTC ordered Microsoft to offer two versions of Windows in South Korea. In one version, Windows Media Player and Instant Messenger software must be removed; the other version must include links to Web sites that allow consumers to download comparable software offered by competitors. The FTC also demanded that the Redmond, Washington, company send CDs to existing users of Windows, allowing them to replace Windows Media Player and Instant Messenger. It also ordered Microsoft to unbundle Windows Media Service from the Windows Server operating system.

Microsoft said Wednesday it will appeal the judgment and has no immediate plans to withdraw from the South Korean market.

The DOJ said its own 2002 antitrust settlement with Microsoft, which prohibits Microsoft from preventing PC vendors and end users from substituting other vendors' "middleware," provides "clear and effective protection for competition and consumers."

"We had previously consulted with the Commission on its Microsoft case and encouraged the Commission to develop a balanced resolution that addressed its concerns without imposing unnecessary restrictions," the statement said.

The DOJ said unbundling of elements of the OS would have a limited effect on competition, citing what it called "lackluster" sales of a special version of Windows that the European Commission forced Microsoft to sell as part of its own antitrust judgment in 2004. That version has Windows Media Player removed.

However, the U.S. will continue to work with South Korea to develop sound antitrust enforcement policies, the statement said.

(Andrew Salmon in Seoul and Dan Nystedt in Taipei contributed to this report.)