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SEATTLE (AP) – Microsoft Corp., responding to a court ruling that said its competitive practices broke the law, agreed Wednesday to let computer manufacturers remove shortcuts for some Microsoft products from the Windows desktop.

The company also said computer makers can continue to add the icons of other technology companies, such as RealNetworks or AOL Time Warner.

Microsoft’s earlier licensing agreements allowed manufacturers to add icons such as the one for Netscape’s rival Internet browser. But the agreements prohibited them from removing Microsoft icons such as the one for Internet Explorer.

Computer manufacturers feared confusion if they had more than one browser appearing on the desktop. And since they couldn’t get rid of the Explorer browser icon, many decided not to add the Netscape shortcut.

In a ruling last month, the U.S. Court of Appeals found that such agreements with manufacturers broke the law.

The court said Microsoft used its power to illegally maintain a monopoly by giving preference to Microsoft products on the computer desktop, considered to be the prime real estate of new computers.

Previously, Microsoft had said it wanted a clean desktop, free of all icons, for Windows XP, the latest version of the operating system, now in development. In light of the ruling, that plan would have been illegal, because it prohibited manufacturers from adding shortcuts to competing products.

Windows XP is due out in October. The new licenses will also allow manufacturers to remove the icons for Internet Explorer in previous versions of Windows.

Compaq Computer Corp. spokesman Arch Currid said Microsoft already has been cooperative in giving Compaq some freedom to structure desktops on its computers.

“We already really have a strong relationship with Microsoft and we felt like we had good flexibility before this decision,” Currid said.

Hewlett-Packard Co. spokeswoman Diane Roncal characterized Microsoft’s decision as a good first step but said the computer maker was hoping for more concessions.

“We are looking forward to Microsoft’s implementation of the court ruling across several additional areas to allow (manufacturers) more flexibility to provide ideal solutions for their customers,” she said. She declined to elaborate.

Microsoft chief executive Steve Ballmer said the announcement does not take the place of settlement discussions with the Justice Department or other government bodies, or of further legal proceedings.

“We recognize that some provisions in our existing Windows licenses have been ruled improper by the court, so we are providing computer manufacturers greater flexibility,” Ballmer said.

Richard Blumenthal, the Connecticut attorney general who was one of 19 attorneys general that sued Microsoft, said Wednesday’s announcement meant little, since Microsoft already won the battle for Internet browser dominance.

“There’s a lot unclear in this proposal. Most importantly, what it means for other Microsoft products or competitors’ products,” Blumenthal said. “The question is, how will they react to other products from competitors that pose a threat to Microsoft’s operating system?”

Ballmer said the changes will not affect the planned Oct. 25 launch date for Windows XP.

Shares of Microsoft closed up $2.02 to $66.50 on the Nasdaq Stock Market.


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