Microsoft vows to play fair

The voluntary principles will come into play after major parts of a U.S. government decree related to the landmark U.S. antitrust case against the software maker expire next year, said Brad Smith, general counsel at Microsoft. They focus on the freedoms that users, manufacturers and developers can expect in Windows Vista and its successors.

"In the broadest sense, I am here to pledge Microsoft's continued commitment to vigorous competition and vital innovation in the software marketplace--and to explain how this commitment is guiding our development of the next-generation Windows operating system, Windows Vista," Smith said in a speech at a luncheon here hosted by the New America Foundation, a public policy think tank that counts Google CEO Eric Schmidt as a board member.

Under the principles, users and manufacturers will be free to change any default settings, to install any software and to remove key Windows features as they please, Smith said. Developers will enjoy access to a broader range of application programming interfaces, or APIs, and anyone will be able to license Microsoft's communications protocol or patents, within certain parameters.

The announcement comes just a week after the European regulators slapped the company with a $357.3 million fine for noncompliance with a 2004 antitrust ruling. In addition, several U.S. antitrust-related provisions imposed on Microsoft by a federal court run out in November 2007. The company agreed with federal and state prosecutors in May to extend certain parts of the judgment related to licensing of its communications protocols until 2009.

The principles unveiled on Wednesday aren't meant to substitute for antitrust law, nor are they as comprehensive as some might like, Smith acknowledged. "We do not pretend these principles answer all questions for all time or even for now," he said.

But they reflect the fact that Microsoft has learned a lot in the nine years since the U.S. government launched its antitrust probe in earnest, Smith said. Chief among those lessons, he said, is the recognition that Microsoft has "a special responsibility both to advance innovation and to help preserve competition in the information technology ecosystem."

That means, for instance, that if a PC manufacturer wants to ship machines with a competing search engine enabled, that's just fine with Microsoft, Smith said. That statement appeared to be an almost direct rebuttal to concerns raised by Google earlier this year about a search box planned for Internet Explorer 7 in Windows Vista.

"Users can reset settings and choose whatever they want as things go forward," Smith added.

Such flexibility should also allow the "phenomenal success" of others, such as Apple Computer's iTunes software on the Windows platform, to continue, he said.

The principles also include a nod to the hot-button issue of Net neutrality, or the idea that network operators must not be permitted to make deals offering higher priority to Web content and service providers that pay for the privilege.

On Net neutrality, Smith promised that Microsoft would "design and license Windows so that it does not block access to any lawful Web site or impose any fee for reaching any non-Microsoft Web site or using and non-Microsoft Web service."

He did not, however, claim that the principles are entirely comprehensive. No mention was made, for instance, of privacy and security because "we didn't think those issues belonged as part of competition issues," Smith said. He added that Microsoft devotes the largest chunk of its research and development spending to security.

The principles drew applause on Wednesday from two Democrats in Congress. Rep. Ed Towns of New York said the document gave him confidence that America's software industry will continue to see a resurgence in activity. Rep. Jay Inslee, who represents a district in Microsoft's home state of Washington, said the principles "reaffirm Microsoft's commitment not only to compliance with government regulations, but also to technological innovation and consumer choice."

Directions on Microsoft analyst Matt Rosoff said he suspected that the timing of the announcement was tied at least in part to the European Commission's action against Microsoft.

"More generally, Microsoft wants to avoid any more expenses related to lawsuits--these fines and settlements have cut more than $6 billion from the company's bottom line in the last few years," he said in an e-mail interview. "And I think with organic growth slowing in some of its businesses, Microsoft is more acutely aware of these expenses than ever before."