SEOUL- US software giant Microsoft has sealed a 30 million dollar deal with South Korean Internet 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.

Microsoft and Daum issued a joint statement saying the deal would include putting "select online content from Daum on MSN and other marketing and promotional opportunities."

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

"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 partneship," said Daum vice CEO Kim Hyun-Young.

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 for 111.2 billion won.

The Korean company hopes to combine its business know-how and the brand of Lycos, the seventh-most visited Web site in the United States.

But there have been concerns about a lack of profitable business models in Lycos and the need for Daum's financial backing to normalize operations at Lycos.

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

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 its 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.

If the commission rules against Microsoft, Microsoft could be ordered to remove parts of bundled software from its Windows operating system. It could also face a fine of up to 5 percent of its sales here.

Microsoft has insisted Windows XP users have the option to use the instant messenger system as installed or not to use it. It has said it could appeal the commission's ruling.

Most computer manufacturers in South Korea package their products with Windows XP as their base operating system.

The European Commission has already ruled that the US company should sell its Windows system without its Media Player software to ensure fair competition with European rivals.

(Photo:Daum's corporate Seoul office. US software giant Microsoft has sealed a 30 million dollar deal with South Korean Internet portal Daum Communications to settle an anti-trust suit and put the two firms in a new partnership)