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  Will Microsoft Pull Out of Korea?
FTC, Experts Say MS Should Stick It Out

By Kim Tae-gyu
Staff Reporter

Bill Gates
After a landmark ruling by the Fair Trade Commission (FTC) against Microsoft Wednesday, speculation is rising over whether the firm will go through with its threat of pulling the Windows operating system out of the local market.

Both the FTC and Microsoft Korea, the local unit of the world’s foremost software maker, said this worst-case scenario will not materialize despite the tough ruling by the FTC.

``Now is not the proper time to talk about such an improbable outcome. We will appeal the FTC ruling and channel our efforts into reversing it,’’ Microsoft Korea spokesman Kwon Chan said.

FTC chairman Kang Chul-kyu also told a press conference he is confident that Microsoft will not delay releasing new versions of Windows here.

In late October, Microsoft threatened it might stop servicing Windows here or delay the release of new versions should the FTC require it to remove code or redesign Windows uniquely for South Korea.

Yoo Jae-sung, president of Microsoft Korea, addresses the audience during the Partners Conference 2005 at the W Seoul- Walkerhill hotel in Seoul, Wednesday.   /Yonhap
The point made in its quarterly report, filed with the U.S. Securities and Exchange Commission, added further pressure to the FTC’s investigations of Microsoft for anti-trust.

The case focused on accusations that Microsoft violated fair trade rules by unlawfully incorporating its audio-visual program, Media Player, and instant messaging service, MSN Messenger, into its dominant Windows platform.

After deliberating the charge about four-and-a-half years, the FTC Wednesday slapped about 33 billion won ($31.9 million) in fines on the firm, as well as ordering it to make two new Windows versions in the next six months.

More specifically, the FTC required Microsoft to split the two programs in question from Windows or to add programs made by its competitors to the package of the operating system.

Kwon believed that the ruling does constitute a request to ``remove code or redesign Windows uniquely for Korea.’’ But he said the firm will try to appeal it via litigation instead of pulling Windows out of South Korea.

Kang Lok-hee, an analyst at Daishin Securities, also said there is little possibility for Microsoft to leave the domestic market in years to come.

``Presently, Korea is a big market for Microsoft. Plus, the outfit would concentrate on the legal battle in the foreseeable future rather than throwing away the market,’’ he said.

Mixed Responses

Meanwhile, South Korean companies presented disparate stances toward the FTC ruling.

SK Communications, the nemesis of Microsoft and operator of the nation’s No. 1 instant messaging service NateOn, greeted the ruling.

``The FTC did its job properly as it attempted to correct past wrongdoings by imposing fines on Microsoft, which has sought to transfer its monopoly in Windows to other programs,’’ SK spokesman Kwon Chang-hyun said.

Regarding the mandatory release of two new Windows versions, however, Kwon was cautious since it can actually benefit Microsoft, not its competitors.

``We are checking technical viability of FTC measures, especially the one that urges Microsoft to include most messenger services in Korea. To do that, Microsoft may ask for the disclosure of our source codes and we cannot accept it,’’ Kwon said.

By contrast, PC makers including runner-up laptop producer LG Electronics were downbeat about the FTC ruling.

``If we should embrace two more Windows versions, that will cost us considerable money in making the software suitable for our PCs. We are wary of that,’’ an LG spokesman said.

Kang at Daishin predicted the ruling will not affect end users for the time being as Microsoft plans to file a time-consuming appeal against the FTC.

He added the decision would provide good opportunities for rivals of Microsoft to take a firm root here.

``Anyway, the FTC took issue with the Microsoft strategy of using the monopoly of Windows to expand its business horizons into the applications market by packaging them,’’ Kang said.

``As a result, programs such as open-source Linux, which has been choked by the predominant status of proprietary Windows, will be able to carve out a niche,’’ he added.


12-07-2005 17:08

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