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S. Korea Fines Microsoft $32 Million, Orders 'Monopolistic' Bundling Stopped

South Korean antitrust authorities have fined the Microsoft Corporation $32 million, saying it violated the country's fair trade laws. Seoul is also ordering Microsoft to change the way it sells its products. The software titan says it will appeal, but has backed down from an earlier threat to pull its Windows operating system out of South Korea altogether.

South Korean authorities say Microsoft has been abusing its dominant market position here, and that it must pay.

Fair Trade Commission Chairman Kang Chul-Kyu announced a $32 million fine against the U.S. software corporation on Wednesday. Mr. Kang says Microsoft engages in unfair trade practices, which encourage monopoly.

Windows dominates the global personal computer industry. Most computers are sold with the system already built in, and most independent software is designed to be Windows-compatible.

Wednesday's decision comes four years after South Korean competitors complained about Microsoft's practice of bundling extra programs with its Windows operating system.

The complaints dealt specifically with the inclusion of the Windows instant messenger system, which allows people on different computers to converse in real time, and with the Windows Media Player, which plays sound and video.

South Korean authorities say Microsoft must now sell two versions of Windows in South Korea - one with the extra programs, and one without them.

Oliver Roll, Microsoft's General Manager of Asia-Pacific Marketing, says the company will fight the ruling.

"We think it's a bad thing for consumers, we think it's a bad thing for industry, and we think it's a bad thing for innovation," he said. "We will appeal the decision, and we're confident that we will win that appeal."

Mr. Roll says it is unlikely that Microsoft will pull Windows out of South Korea altogether. The corporation had threatened to do so if it deemed the South Korean judgment too harsh.

If Microsoft loses its appeal, Mr. Roll says South Korean software developers will also lose out, because they, too, will have to produce separate versions of their products for the sake of compatibility.

"That means that Korean developers will have to have more costs involved in development," added Mr. Roll. "It will slow down their development cycles, and it will mean that those Korean developers will be less competitive."

Microsoft is also appealing a similar European Union ruling, which could cost it $586 million. The company reported $12.2 billion in profit last year.