US critiques South Korea decision in Microsoft case

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WASHINGTON (Reuters) - US officials on Wednesday criticised a decision by South Korean regulators forcing software giant Microsoft to separate its instant messaging service from the Windows operating system.

A US official said Korea's Fair Trade Commission had gone "beyond what is necessary or appropriate" by ordering Microsoft to introduce a version of the operating system without Windows Messenger.

The Justice Department "continues to believe that imposing 'code removal' remedies that strip out functionality can ultimately harm innovation and the consumers that benefit from it," Bruce McDonald, an official in the agency's antitrust division, said in a statement.

The Korea ruling, which resembles a 2004 decision by the European Commission, held that Microsoft breached antitrust laws by selling a Windows version that incorporated its instant messaging software.

Microsoft was also fined about US$32 million by Korea's FTC and ordered to separate its Media Server from the operating system. The company said it would appeal the decision, but said it did not expect the ruling would force it to withdraw the Windows operating system from the country.

The Korean probe into Microsoft was launched more than four years ago after allegations raised by South Korean Internet portal Daum Communications Corp.

In its critique, the Justice Department contrasted the Korean ruling with its own antitrust settlement with Microsoft, which was endorsed by a US judge in 2002. It said that settlement had provided "clear and effective protection for competition and consumers".

The US terms did not require Microsoft to separate any software features from Windows.

Instead, they were designed to give computer manufacturers greater freedom to feature rival software on their machines by allowing them to hide some Microsoft icons on the Windows desktop, and by forcing the company to disclose more to competitors about the internal workings of the operating system.

Since the US settlement was approved, the judge overseeing the case has often praised Microsoft for its efforts to comply with the deal.

However, Microsoft has retained its dominant position in the software business, and no major competitive threats have emerged to the Windows operating system or Internet Explorer browser.

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