Feds side with Microsoft in Korea flap

By Declan McCullagh
Staff Writer, CNET News.com

Published: December 7, 2005, 10:58 AM PST

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The Bush administration on Wednesday protested South Korea's decision to fine Microsoft roughly $32 million and order the software company to redesign portions of its Windows operating system.

"Korea's remedy goes beyond what is necessary or appropriate to protect consumers, as it requires the removal of products that consumers may prefer," J. Bruce McDonald, deputy assistant attorney general at the Justice Department's antitrust division, said in a statement.

The Korea Fair Trade Commission ruled that Microsoft violated South Korean law by bundling its Windows Media Service with the Windows Server operating system, as well as its media player and instant-messaging program with Windows. Microsoft will have to facilitate downloads of third-party media software and stop selling in Korea a version of its server software with Windows Media Services.

Microsoft said the decision did not properly apply Korean law and it will file an appeal.

Korea's case follows a massive fine of about $613 million that the European Union slapped on Microsoft last year. The European government also demanded a version of Windows without a media player--though there has been scant demand for it.

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At the time, U.S. politicians from both major political parties protested the European Union's move, saying that it was of the "utmost importance" that the U.S. continue to take the lead in overseeing American companies' business practices.

Perhaps fearing that governments may line up by the dozens to take a chunk out of Microsoft's hide by wielding antitrust charges as a secondary form of taxation, the Bush administration is echoing that line. The administration argues that Microsoft is already regulated by U.S. law and has been under court scrutiny because of a 2002 settlement.

"Sound antitrust policy should protect competition, not competitors, and must avoid chilling innovation and competition even by 'dominant' companies," McDonald said. "Furthermore, we believe that regulators should avoid substituting their judgment for the market's by determining what products are made available to consumers."