Microsoft Settles Daum IM Bundling Suit

Microsoft has put to rest another legal problem. The company announced on Friday that it had reached a settlement with South Korean Internet portal Daum.

Daum had complained to the South Korean Fair Trade Commission in 2001, accusing Microsoft of breaking the law by tying its instant messaging software to Windows. A lawsuit on the same grounds was filed in 2004.

As part of the settlement, Microsoft will pay Daum $30 million, including $10 million in cash, a $10 million advertising package, and the remaining $10 million within various other agreements. In return, Daum would drop its lawsuit.

Much like Microsoft's RealNetworks settlement, the two companies will form a partnership, with Microsoft giving space for Daum content on its MSN Web site, as well as promoting the company's products elsewhere.

Settling with both RealNetworks and Daum does not mean the Fair Trade Commission investigation will end, however. The Korean watchdog group said shortly after the RealNetworks settlement that it planned to see the inquiry through until the end. A decision in that matter is expected soon.

Sanctions from the Korean government could include the separation of Microsoft's IM software from Windows. Also, fines of up to five percent of sales during the period in which Microsoft broke the law could be applied.

Microsoft has already been forced to separate Windows Media Player from its operating system in Europe as part of a 497 million euro judgment in March 2004. The company released Windows XP 'N' in June of this year, but it is only available in Europe and demand has been minimal.