Microsoft, Daum bury hatchet

As the clock ticked away toward a regulatory ruling here on Microsoft’s flagship operating system, the software giant and Daum Communications announced yesterday that they had reached an agreement on their dispute over instant messaging. “The settlement includes a $10-million cash payment, an advertising commitment valued at $10 million plus other business terms that are estimated to be worth approximately another $10 million,” the two companies’ statement said. The elements of the settlement include a commitment by Microsoft to use material from Daum’s Web site on its Web portal, MSN. “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 Kim Hyun-young, the deputy chief executive of Daum. Microsoft also welcomed the settlement. “This agreement marks not only the end of our legal dispute, but more importantly, the beginning of a closer working relationship between our companies.” said Tom Burt, Microsoft’s deputy general counsel. But Korea’s Fair Trade Commission was unimpressed, just as it was when RealNetworks dropped a similar complaint here about Microsoft after those two companies reached a settlement on Microsoft’s inclusion of a media player in its operating system. As it did then, the commission said it would continue its investigation. A statement from the body yesterday noted that it was investigating the case “for the sake of consumers and the national economy.” The companies did not say whether the settlement was contingent on an end of the government investigation favorable to Microsoft, but they did say that neither would answer any additional questions about the pact. After the announcement of the settlement, Daum Communcation’s shares shot up nearly 10 percent. Daum, which acquired the U.S. Web portal Lycos Inc. last year, has been cash- and profit-short since then. Daum, Korea’s second-largest portal site, filed its complaint against Microsoft Korea in 2001, alleging that Microsoft’s bundling of instant messaging software with its operating systems violated antitrust laws and hurt its competing software. In 2004, it filed a 10-billion-won ($9.5 million) lawsuit against Microsoft. The settlement between the two companies followed a recent effort by Microsoft to mend fences with its business rivals. It came a month after Microsoft agreed to pay $761 million to RealNetworks to settle the dispute over Microsoft’s media player. It settled a dispute with IBM in July by paying $770 million. Last year, Microsoft paid $770 million to IBM, and last year, it settled a dispute with Sun Microsystems with a payment of $1.9 billion. by Seo Ji-eun