Microsoft relents on default search engine in IE7, letting users choose

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Washington (DC) - Giving journalists another opportunity to use the phrase "bending to pressure" with respect to Microsoft, the company demonstrated another curious and uncharacteristic about-face today, stating it will allow users to choose which search engine to use as the default for Internet Explorer 7 in Windows Vista. In the current beta and previous editions, when an existing choice had not been listed in the System Registry, an IE7 installation presumed the default search engine as Windows Live Search.

The statement itself came in a venue that's also uncharacteristic for Microsoft: a public policy speech entitled, "How Will Microsoft Enhance Windows While Promoting Competition?" by Brad Smith, Microsoft's senior vice president and general counsel. The speech took place this afternoon at a meeting of the National Press Club. Such speeches are often taped for repeat during the weekend schedule on C-SPAN.

"Our goal is to be principled and transparent as we develop new versions of Windows," reads a Microsoft statement this afternoon citing Smith's speech. "These voluntary principles are intended to provide the industry and consumers with the benefits of ongoing innovation, while creating and preserving robust opportunities for competition. The principles incorporate and go beyond the provisions of the U.S. antitrust ruling."

Microsoft chose this speech as its rollout vehicle for a twelve-step program the company is calling "Windows Principles: Twelve Tenets to Promote Competition." The principles are presented in practically a "bill of rights" format, the first five of which are enumerated for users of Windows, followed by four for developers, and the remaining three devoted to that major watchword in Europe these days, "interoperability." Principle #3 reads as follows: "Microsoft will design Windows so as to enable computer manufacturers and users to set non-Microsoft programs to operate by default in key categories, such as Web browsing and media playback, in lieu of corresponding end-user functionality in Windows. Computer manufacturers are free to set these defaults as they please when building new PCs."

Principle #5 states that Microsoft will begin posting its royalty fees for all customers to its Web site, for the public to see. Embedded in this principle is the company's subtle pronouncement that it kept its promise to the European Commission to reassess its royalty structure for re-release today. Today was the deadline for the last of seven stages of documentation to be turned over to the EC's independent monitor, Dr. Neil Barrett, for review. Last week, the company also said it would publish its new royalty structure today, but EC competitiveness commissioners used that statement as an indication that Microsoft wasn't actually "done" with its delivery of documentation by the deadline the EC chose. Microsoft was fined last week on that basis.

Clearly trying to place the ball back in the EC's court, Smith said in his speech today, "We have a responsibility to bring information about new technologies to regulators, so we can pursue an open and constructive dialogue before the launch of these new products," referring to Vista and Office 2007. Microsoft would like to at least be on the record as having spoken directly with EC regulators in an informal setting, prior to any future statement by commissioners that the company is withholding interoperability information.

Smith's speech was sponsored by the New America Foundation, a non-profit public policy institute whose leaders have no obvious ties to technology organizations.

Today's reversal of policy is the latest in a curious chain, the last link of which came Monday, when Microsoft reversed its stand on the Private Folder "Powertoy," after complaints that it could give users unauthorized methods to encrypt information and hide it from their employers. Since our report on Monday, the download link to Private Folder no longer works, so it appears the product is no longer available from Microsoft.

Some are saying recent events have indicated a new sensitivity in the Microsoft corporate culture - perhaps almost a hyper-sensitivity. At any rate, the investment community seemed to approve, with shares of Microsoft trading nicely higher by about 2.5% in mid-afternoon NASDAQ trading.