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Microsoft continues ISP push

Amid government hearings about its business practices and DOJ antitrust allegations, the giant keeps up its push to sign up ISPs as IE 4.0 distributors.

Microsoft (MSFT) changed the terms under which it licenses its latest browser to Internet service providers, but that hasn't stopped the company's continued push to sign up ISPs as Internet Explorer 4.0 distributors.

The software giant announced today that more than 3,600 ISPs now license and distribute Internet Explorer 4.0 to their customers. About half of those ISPs customize the browser or rebrand it with their own logos using Microsoft's Internet Explorer administration toolkit. In addition, the company now offers a book and video to help ISPs customize and distribute the browser.

ISPs and other third parties have been eager to customize Internet Explorer because the browser's architecture allows developers to use pieces of it in their own applications. For example, Intuit has integrated IE into its Quicken financial software. Developers will soon have another choice, however, as Netscape Communications is making the source code for its upcoming Communicator software suite (which includes the Navigator browser) free for developers to reuse and modify. Netscape today released a draft of the licensing terms for Communicator code development. (See related story)

The timing of Microsoft's announcement comes amid scrutiny of the company's relationship with IE licensees, including Internet service providers. Critics allege that Microsoft has prohibited IE licensees from promoting rival products, namely Netscape's Navigator browser. In Tuesday's Judicial Committee hearing, Senator Orrin Hatch (R-Utah) asked Microsoft chief executive Bill Gates point-blank if those allegations are true. Gates defended the legality of his company's dealings but avoided answering the question directly.

It was revealed last month that several ISPs were subpoenaed by the Justice Department regarding their agreements with Microsoft. Last weekend, Microsoft announced it was amending its contracts with about a dozen American ISPs and roughly 30 more in Europe to allow them more freedom in promoting other browsers, although not to a greater extent than IE, company executives said. Microsoft contends the amended contracts have nothing to do with the federal lawsuit.

At Tuesday's hearing, Senator Hatch indicated that Microsoft agreed to change the contracts in part because of his committee's inquiries. But a Microsoft spokesman played down the role of the committee. "The modification of our of cross-promotion agreements with Internet service providers was actually something that has been in the works for three to four months and was not specifically related to the Judiciary Committee's inquiries," Mark Murray told Reuters.

In addition, there also have been allegations that Microsoft requires certain licensees to maintain a percentage of subscribers who use Explorer. If the licensees don't meet the quotas, their licenses are suspended. Antitrust experts remain divided as to the legality of such practices.

Reuters contributed to this report.