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Saturday, October 14, 2006 - Page updated at 12:00 AM

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Microsoft makes Vista changes

Seattle Times technology reporter

Microsoft is confident that changes it's making to Windows Vista will assuage competition concerns raised by European and Korean antitrust officials, and it plans to launch the new operating system on schedule around the world.

Last month, the company had raised the specter of a delayed launch in Europe, pending negotiations with the European Commission (EC) over features in Vista.

Microsoft General Counsel Brad Smith struck a diplomatic tone Friday, saying the company received "clear guidance" during months of "constructive dialogue" with regulators at the commission, the administrative arm of the European Union. In response, it is making significant changes to three areas of the software: security, search and a new file format.

"Having made each of these changes, the company and [CEO] Steve Ballmer felt comfortable moving forward and felt confident that we are in compliance with our EU competition law obligations," Smith said during a conference call with reporters.

He said Ballmer spoke with European Competition Commissioner Neelie Kroes on Thursday to inform her of the company's plans.

Wall Street viewed the news favorably, bidding Microsoft shares up 15 cents Friday to close at $28.37, a level it has not seen in nearly two years.

The company's comments strengthened investor confidence in the release schedule for Vista, due out for large business customers in November and for broad release in January. However, Vista is coming out more than two years later than originally planned.

"There's a timing issue," said Joe Wilcox, an analyst with Jupiter Research. "Microsoft wants to ship this operating system on time and it wants to ship it everywhere. And that puts Microsoft in a position to be more conciliatory."

Both Smith and the EC pointed out that there is no "green light" from the regulatory body, which does not approve products in advance.

Microsoft "must shoulder its own responsibilities to ensure that Vista is fully compliant" with competition rules and a 2004 anti-trust ruling against the company regarding the predecessor to Vista, the EC said in a brief statement Friday.

Fines and penalties stemming from that ruling have ballooned to nearly $1 billion. Microsoft is appealing.

The changes to Vista Microsoft announced Friday offer no guarantee that additional antitrust issues won't arise in the future.

"The commission will closely monitor the effects of Vista in the market and, in particular, examine any complaints concerning Vista on their own merits," the statement concluded.

Computer-security firms, among the most vocal complainants to the EC about Vista recently, withheld judgment on Microsoft's changes.

"It's encouraging that they've said this," said Chris Paden, a Symantec spokesman. "It's a step in the right direction, but at the same time, security vendors are going to be wondering when" Microsoft will make technical details of the changes available for them to use.

McAfee, another security firm, did not return calls for comment.

Smith outlined the changes, which will apply to versions of the program sold in all markets, not just Europe.

Access granted

Microsoft is providing access to the kernel, or central part, of its code for 64-bit versions of Windows Vista, Smith said. A security feature called PatchGuard keeps the kernel inaccessible and unchanged. Previously, vendors had used access to the kernel for features of their own products.

Instead of removing PatchGuard, Microsoft built kernel-level application programming interfaces (APIs) so that security software vendors can still get access to parts of Vista they need, Smith said.

Microsoft also changed its Windows Security Center, a feature that sends alerts to users when, say, a firewall has been turned off or anti-virus software needs updating. Now, when a competitor's security product is installed, Windows Security Center will not duplicate alerts the competitive product may send.

Upgrade-process changed

In search, Microsoft changed the upgrade process to Vista and its Internet Explorer 7 browser to ensure that all search engines, such as Google, Yahoo! and its own Live Search, are on a level playing field.

Microsoft also agreed to submit its new file format — XML Paper Specification, or XPS, a competitor to Adobe's PDF — to a standards organization. Smith said it will also loosen the licensing terms under which the XPS format is available to other software providers for use in their own products.

He noted that the changes made at the EC's behest are one part of the global regulatory thicket Microsoft has navigated in building Vista.

"Windows Vista is probably one of the most heavily scrutinized products in the history of technology," he said, adding that Microsoft has worked with more than 20 government agencies on three continents.

Smith said that Microsoft has also been in discussions with the Korean Fair Trade Commission and plans to release a unique version of Vista to comply with its rules, on the same schedule.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com

Copyright © 2006 The Seattle Times Company

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