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Last Updated: Friday, 27 February, 2004, 06:47 GMT
Microsoft ends 'unfair' contract
Windows XP
Microsoft officials said they would investigate
Microsoft has announced it is to ditch a controversial contracts provision under investigation in Japan.

The software giant's statement comes after Japanese fair trade officials raided its Tokyo offices on suspicion of violating anti-monopoly laws.

Microsoft said it would now be removing the contract detail which prevents computer firms from suing it for any use of their patented technology.

The Japanese Fair Trade Commission had said it was unfair and restrictive.

Microsoft is accused of making companies such as NEC, Hitachi and Sony, who want to pre-install its Windows software on their computers, sign away their right to sue, even if they find Microsoft has used their patent technology.

Continuing denial

In its statement Microsoft again denied any wrongdoing, but said it would be removing the contract provision for "customer satisfaction" reasons.

Unless Japanese companies agree to the (non-suing) clause, they cannot pre-install Windows in their computers
Japanese Fair Trade Commission spokesman

"Microsoft believes that the patent-related provision is lawful under Japanese, US and EU law," it said.

Microsoft spokesman Jim Desler said it had been intended to reduce litigation and was "narrow in scope".

The software giant also said the patent-related provision had been approved by European Union regulators and reviewed by anti-trust authorities in the US.

The Japanese watchdog said Microsoft was suspected of setting unfair conditions when giving licenses for Windows to Japanese computer makers.

Latest case

"Unless Japanese companies agree to the clause, they cannot pre-install Windows in their computers," he said.

It is not the first time the US software giant has been accused of abusing its monopoly on PC operating systems to push prices higher or harm rivals.

It faced allegations of unfair trading in 1998, in Japan, and it is in settlement negotiations with the European Commission, which has accused it of trying to stifle competition for multimedia players, by tying its Media Player programme to its Windows operating system.

RealNetworks is suing Microsoft over the same issue, accusing it of unfairly monopolising the growing market for digital music and video.

Microsoft has denied such allegations, insisting the market is competitive.

The company last year said it had settled 10 consumer class action suits in a number of US states at a total cost of $1.6bn. The legal cases accused Microsoft of using its dominant position in the market to overcharge for its software.

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