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MS drops channel requirement

Microsoft is giving PC makers the option of shipping a version of Windows 98 that hides a controversial feature called the Active Channel Bar.

Microsoft said today that it is giving computer manufacturers the option of shipping a version of Windows 98 that hides a controversial feature called the "Active Channel Bar."

The feature is a menu that promotes and guides users directly to certain Web sites, such as Walt Disney and Time Warner. Microsoft's announcement comes a week after the Software Publishers Association complained to the Justice Department that the channel bar and other so-called first-boot requirements placed on PC makers were anticompetitive.

"These restrictions have nothing to do with the functionality of the operating system and serve as a type of tying arrangement that decreases consumer choice and provides Microsoft with a stream of income in other products and services as a condition for licensing Windows 98," SPA's president wrote in an April 10 letter to assistant attorney general Joel Klein, who heads the Justice Department's antitrust division.

Microsoft spokesman Tom Pilla today confirmed Microsoft's decision to allow PC vendors--also known as original equipment manufacturers, or OEMs--to ship Windows 98 with the channel bar hidden. He did not say why the company was making the move.

Since facing intense scrutiny of its business conduct by the Justice Department, a dozen or so state attorneys general, and regulators in Europe and Japan, Microsoft has modified a number of controversial practices.

Just last week, the software giant said it was changing contracts with hundreds of content providers that limited their ability to promote Web browsers made by competitors such as Netscape Communications. And early last month, Microsoft said it was dropping similar provisions in cross-promotional deals with Internet service providers.

For years, Microsoft has tightly controlled content that users see when starting up their computers, a process known as the first boot. While allowing OEMs to hide the channel bar if they wish, Microsoft gave no indication that it will modify other restrictions that fall under the first-boot requirements.

For example, Microsoft still requires OEMs to feature an "ISP Wizard" that promotes a list of Internet service providers that, in turn, compensate Microsoft for being included.

"We believe that the choice of which services to include, and how the sign-up revenue may be shared, should be a matter of negotiation between the OEM and such third parties," Wasch wrote. "The growth of the Internet now makes the screen the key portal to the world's information sources, in addition to the point of access to an ever-increasing range of products and services."