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Microsoft, Daum reach $30 mln settlement

Posted by iTech - 2005-11-11

Microsoft Corp. has reached a $30 million settlement with South Korea's Daum (035720.KQ) over an antitrust suit, but regulators will continue to review their case against the world's largest software maker.
Shares in Daum Communications Corp., the country's top Web portal operator, jumped nearly 9 percent on Friday after the two firms announced the agreement, which includes a $10 million cash payment by Microsoft to Daum, $10 million in advertising deals and unspecified business terms worth a further $10 million.

Analysts say the payment would alleviate a cash shortage at Daum, which acquired Lycos Inc. last year and has been suffering heavy costs linked to restructuring efforts at the U.S. portal.

"It's quite a lot of money for Daum, although the agreement will have little impact on its fundamentals or Microsoft's dominance in the Korean market," said Lee Wang-sang, an analyst at Woori Investment & Securities.

Daum, which claims 55 million users, mostly in South Korea but also in the United States, China and Japan, said it would drop its 2004 lawsuit against Microsoft in South Korea and withdraw its 2001 complaint lodged with the local antitrust watchdog, the Fair Trade Commission.

"The agreement resolves the companies' antitrust dispute in South Korea," Microsoft and Daum said in a joint statement. The two sides also said they would work to build a new business partnership.

However, South Korea's watchdog said its review of allegations of unfair business practices by Microsoft Corp. would continue despite the settlement.

"The complaint by Daum was used as evidence for the broader case (against Microsoft)," the Fair Trade Commission said in a statement. "The withdrawal of Daum's complaint will have no impact in proceeding with the review of the Microsoft case."

A Microsoft official said the U.S. company would work closely with the commission.

"The resolution and agreement we made with Daum will not necessarily have any impact on the KFTC investigation," Oliver Roll, general manager for Microsoft's marketing in Asia Pacific, said by telephone.

"We believe we have put a strong case forward with the KFTC. We hope the KTFC officials will take our evidence into account," he said, adding a ruling was expected within the next few weeks.

The commission began its investigation in 2001 when Daum complained Microsoft had breached antitrust rules by incorporating its Instant Messenger and Media Player services into the Windows operating system.

The commission broadened its probe following a similar complaint from RealNetworks Inc. in 2004.

RealNetworks dropped its suit in South Korea after Microsoft agreed in October to a $761 million settlement with the U.S. firm, which provides RealPlayer software.

Shares in Daum were up 5.89 percent to 33,250 won by 0417 GMT, leading the Kosdaq market's 0.59 percent gain

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