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Microsoft amends ISP contracts

Following a similar move in Europe, Microsoft agrees to drop some requirements in licensing deals with U.S. Internet service providers.

Microsoft has agreed to drop some of the requirements it imposes on U.S. Internet service providers in its cross-promotional licensing deals, the company said today.

In January, the software giant agreed to remove certain provisions related to browsers for European ISPs. Now it has agreed to drop these requirements for ISPs "worldwide" in order to be "consistent," a spokeswoman said.

Microsoft's deals with ISPs have been the focus of regulatory inquiries both in Europe and the United States. The company's latest move comes amid continuing antitrust investigations, which include this week's congressional hearings on industry competition.

U.S. lawmakers have questioned provisions of deals that allegedly forbid some ISPs from telling some of their new customers about the existence of Web browsers that compete with Microsoft's Internet Explorer, such as Netscape Communications' Navigator.

The changes will liberalize terms for advertising and promoting browsers other than Internet Explorer, said Brad Smith, Microsoft's general counsel. For example, another browser could be promoted, but no more prominently than IE.

The decision affects about ten to 15 ISPs in the United States--including EarthLink--and 30 ISPs in Europe, Smith said. Microsoft plans to modify the contracts during the next week or two, he said.

Some ISPs, including EarthLink, MCI, and Sprint, have reported receiving government requests for information known as "civil investigative demands"--part of a broad investigation into Microsoft's business practices.

The company has denied any wrongdoing and says its decision to change the ISP agreements has nothing to do with the inquiries.

This week, Microsoft chief executive Bill Gates is expected to testify in congressional hearings on competition issues in the computer industry. Netscape chief executive Jim Barksdale and Sun Microsystems CEO Scott McNealy also will testify.