South Korea Fines Microsoft £18m

Microsoft has been fined $32m (£18.4m) by South Korean regulators and ordered to separate its instant messaging service from its Windows software.

The software group said it would appeal against the ruling but did not carry out a threat to withdraw Windows from the country. It was also ordered to allow rival products on its system by South Korea's fair trade commission in a decision that bore similarities with a European commission ruling against Mircrosoft last year.

The FTC, in a ruling that has no repercussions outside South Korea, said the bundling of Windows with the media player and instant messenger service were creating a monopoly and blocking out PC Server and other operating system makers. The investigation began four years ago when South Korean internet service Daum Communications lodged a complaint followed by US-based RealNetworks. Settlements were reached with both companies recently, with RealNetworks accepting $761m and Daum $30m.

Microsoft is inching towards settling its dispute with the EC following the appointment in October of Professor Neil Barrett, a British computer scientist, to monitor its adherence to the EC's ruling. However, the EU competition commissioner, Neelie Kroes, is investigating fresh complaints against the group.

Microsoft announced yesterday that it will invest $1.7bn in India over four years to build its presence in a country that is becoming important in the global software market, with its $17bn software services industry expected to grow by 30% by next year. Microsoft chairman Bill Gates, making a four-day trip to the country, said he expected to nearly double the group's Indian workforce to 7,000.

"We have about 4,000 people [in India]; we would be growing that by 3,000 over the next several years. The human resources here are really fantastic. Our employment growth here would be far more rapid than in the US."

Mr Gates promised to sell more software products to India's small and medium sized companies, which employ 40 million people but have under-developed IT infrastructures. The Microsoft chairman added that the group would encourage the development of low-cost computing in India.