Microsoft (NASDAQ: MSFT), finally seeing the writing on the wall after losing in the European courts, decided today to withdraw its appeal [subscription required] of an antitrust ruling by the South Korea Fair Trade Commission, according to a report in the Wall Street Journal today. "It is important to note that Microsoft remains committed to Korea and continues to work closely with the FTC to ensure that Korean consumers benefit from vibrant competition in the IT industry," the company said in a statement. I bet that's how they really feel. I don't think Microsoft truly wants to help the competition, but they are being forced to do so by the antitrust regulators.

In February 2006, South Korea's FTC imposed a fine of 32.5 Korean ($35.4 million) against Microsoft for abuses related to its dominance in certain software, primarily its Windows operating system. Microsoft must provide two versions of Windows in Korea, one stripped of the Windows Media Player and Windows Messenger and the other carrying links to Web pages that allow consumers to download competing versions of such software. Microsoft appealed this decision in March 2006. This appeal was turned down in May 2006 by the FTC and it asked the antitrust regulator to review the fine. Today Microsoft dropped the appeal most likely because it realized it would lose.

Wednesday will see the launch of MTV's Urge network and thus the official public debut of Windows Media Player 11, and both analyst and hobbyist early notices are positive. WMP 11 and the MTV collaboration are both very important for the future of Microsoft's media plans. Thus far, Media Player-based music sites have not gained serious traction against iTunes and the MTV brand, with a wide variety of music available at comparable prices, may help. More importantly, though, this is going to be a major test of how well Microsoft can collaborate with a content partner, and that's key to Redmond's media future.   

Dependable but not draconian digital rights management is the core issue for all content providers going forward and it will be the gating factor on how quickly distribution moves to the Internet. Both Microsoft and Apple have spent a lot of time courting and consulting content owners on this topic, both with some success. So far, however, Apple's tightly closed iPod ecosystem (and the elegant and simple software that allows) has given them a tremendous marketing advantage over Redmond. But in the long run, neither content owners nor the consumer electronics industry are terribly inclined toward closed hardware ecosystems. The next phase in DRM is creating true cross-platform, multi-device solutions, and this is where Microsoft has a significant advantage. 

Consumers want to be able to buy media once and then play it back on various devices -- they may decide to start watching a movie on the big screen at home and then finish it on the handheld on the way to work. Thus all of a user's media devices need to be able to recognize that the owner has the rights to view given content, even when both the content and the playback hardware may come from different vendors. That's an enormous technical challenge, but it's the sort of thing that Microsoft has done for years, while Apple has opted for very tight hardware control. 

While both the market and the digerati are focused on Redmond's competition with Google and the future of software as a service, it's worth keeping in mind that there's still a huge collection of digital devices coming down the pike that will use localized media playback software.  It's an enormous market up for grabs and one in which MSFT has only begun to compete. 

Photo Credit: AP/MTV