Korea’s remedy goes beyond what is necessary or appropriate to protect consumers, as it requires the removal of products that consumers may prefer, deputy assistant attorney general Bruce McDonald, from DoJ’s antitrust division said.
The statement followed news that Korea’s Fair Trade Commission would impose a $32m fine on Microsoft, and order the company to release a version of Windows without Windows Messenger and Media Player in the Korean market.
Microsoft yesterday backed down on a previously implied threat to withdraw from Korea and announced its intention to appeal the antitrust remedies.
The company had stated in an October filing with the US Securities and Exchange Commission that it might be necessary to withdraw Windows from the Korean market or delay offering new versions in Korea if the Korean FTC’s decision went against it.
Microsoft has to unbundle Messenger and Media Player from Windows within six months after the Korean FTC found that the inclusion of the software within Windows was blocking competition, but it has decided to stay and fight its corner.
We intend to appeal this decision because it is inconsistent with Korean law, it said in a statement. Nevertheless, we will continue developing products for Korean consumers in a way that complies with all laws and is pro-competitive We remain committed to Korea.
The case was brought after complaints from South Korean Internet portal firm Daum Communications Corp alleging unfair business practices, as well as RealNetworks Inc, and continued despite Microsoft settling with both companies.
The US DoJ criticized this approach to antitrust regulation: Sound antitrust policy should protect competition, not competitors, and must avoid chilling innovation and competition even by ‘dominant’ companies, McDonald said.
Microsoft announced a $761m settlement with RealNetworks in October when the media player specialist agreed to withdraw complaints in the US, Europe, and South Korea, while a $30m settlement with Daum was reached in November.
The settlements came too late to prevent the European Commission’s competition watchdog’s forcing Microsoft into remedies that included the release of Windows XP N, a version of the OS without Media Player.
That OS, which costs the same but has less functionality, has been spectacularly unsuccessful in Europe, according to OEMs and retailers. The demand just isn’t there, as the DoJ suggested yesterday.
Demand in Europe for the version of the operating system with the media player code removed has been lackluster, suggesting limited effect on competition from the type of unbundling remedy the Korean Fair Trade Commission is pursuing, McDonald said.
Microsoft continues to appeal against the European Commission’s antitrust ruling, which also saw the company hit with a record 497.2m euro ($613m) fine and other remedies, including removing Media Player from Windows, in March 2004.
The US remedies, by contrast, merely forbade Microsoft from using its market power to prevent or hinder customers or partners from using rival software.
McDonald noted that regulators both sides of the Pacific have communicated on these matters in the past, and said the relationship with the Korean FTC remained overall strong and positive.
