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Microsoft changes content deals

The company says it has modified hundreds of contracts with content companies regarding their ability to promote rival browsers.

    Amid ongoing antitrust investigations of its business conduct, Microsoft (MSFT) said today it has modified hundreds of contracts with content companies worldwide to remove provisions that limit their ability to promote browsers made by competitors such as Netscape Communications.

    The changes, Microsoft backs away from deals which are the latest in a series of low-key retreats from controversial practices, were made this week and come a month after the Senate Judiciary Committee grilled Microsoft CEO Bill Gates over the provisions.

    "These provisions are completely legal and common throughout many industries, but these provisions were being misrepresented by our competitors," a Microsoft spokesman said.

    The contracts dictate terms content providers must adhere to in order to be placed on Microsoft's Active Channel Bar, a menu on Windows 95 that guides users to certain sites that are viewed exclusively with Internet Explorer 4.0.

    Although the changes affect only about two dozen content partners placed on versions of the channel bar distributed in the United States, a total of "several hundred" contracts have been modified when considering versions shipped abroad, the spokesman added.

    According to the Microsoft representative, who asked not to be named, the contracts with online content providers have been modified in three ways.

  • First, content providers featured on the channel bar no longer are barred from featuring Netscape's logo on certain pages of their sites and are no longer required to give preferential promotion to Internet Explorer.

  • Second, partners are no longer required to exclusively distribute Internet Explorer with materials promoting their sites. Previously, partners were barred from including Netscape's Navigator browser on computer disks that promoted their content.

  • Third, certain premium channel partners are no longer barred from paying Netscape for placement on its own channel bar, known as Netcaster.

    The contracts, and similar deals Microsoft signed with Internet service providers, have drawn the scrutiny of the Justice Department, state attorneys general, and members of Congress.

    In March, just days before Gates was taken to task on the content deals by Sen. Orrin Hatch's (R-Utah) judiciary committee, Microsoft agreed to drop some of the requirements it imposed on U.S. ISPs in cross-promotion licensing deals. In January, the company agreed to remove the same provisions imposed on European access firms.

    In addition, late last year, Hatch 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 Navigator.

    At that hearing last November, the Utah senator (a state home to Microsoft rivals such as Novell) also expressed concerns over the software giant's deals with Disney and Time Warner a day after CNET's NEWS.COM reported that the two media giants were offering some online content exclusively to IE 4.0 users.

    Microsoft has agreed to back away from other deals that have drawn much of the government's scrutiny. For example, the company let a deal expire with Paramount Digital Entertainment that pointed to Web content from Star Trek and Entertainment Tonight on MSN. Some of the content was available only through IE under the deal.

    In January, Microsoft struck a pact with the Justice Department that called for the company to provide computer makers with the most up-to-date version of Windows 95 without the desktop icon for Internet Explorer.

    In all these cases, the company said the agreements were not anticompetitive. It says these actions stemmed primarily from business decisions.

    Jeff Pelline contributed to this report.