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Microsoft in deal with Korean portal

"This agreement marks not only the end of our legal dispute, but more importantly, the beginning of a closer working relationship."

Tom Burt, corporate vice president for Microsoft

US software giant Microsoft said yesterday it has sealed a US$30 million deal with South Korean Int-ernet portal Daum Communications to settle an anti-trust suit and put the two firms in a new partnership.

The deal ends a legal battle with Daum, which had accused Microsoft of violating anti-trust rules by unfairly incorporating its MSN instant messaging software into the Windows system.

The settlement includes a cash payment of US$10 million, together with an advertising commitment valued at US$10 million and another US$10 million in business terms.

Microsoft and Daum said the deal would include putting "select online content from Daum on MSN and other marketing and promotional opportunities."

"This agreement marks not only the end of our legal dispute, but more importantly, the beginning of a closer working relationship between our companies," Microsoft's corporate vice president Tom Burt said in a statement.

In return for dropping its suit, Daum, which has its own messaging service, decided to tie up with Microsoft.

"It is significant that we have reached this settlement with Microsoft on terms that we believe are favorable to Daum, and to be able to work together with Microsoft to build a new business partnership," said Daum vice CEO Kim Hyun-Young.

Daum shares rose 9.9 percent to 34,500 won (US$33,000) on expectations that the deal would improve the company's financial structure.

Daum posted an operating loss of 1.5 billion won in the third quarter of this year after it acquired the US portal business of Spain's Terra Lycos.

The South Korean company hopes to expand its business abroad by using the brand of Lycos, the seventh-most visited Web site in the US. But there have been concerns about a lack of profitable business models and the need for Daum's financial backing to normalize operations at Lycos.

The deal came a month after Microsoft agreed to pay US$761 million to RealNetworks, a US firm marketing the "RealPlayer" audio-visual software, in a deal that settled antitrust suits in the US, South Korea and the EU.

Microsoft has used billions dollars to settle a string of disputes brought by major rivals including IBM and Sun Microsystems.

In South Korea, the world's largest software company was accused of abusing its market dominance and violating fair trade rules.

Anti-trust regulators here said Microsoft's deals with Daum and RealNetworks would not affect their own ruling.

"The deals will not affect our ruling. We will go ahead with our deliberations on charges brought against Microsoft," said Lee Hwang, an investigator at the Fair Trade Commission.
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