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Microsoft revises XP
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August 13, 2001: 3:03 p.m. ET
Digital photography software being modified to appease Kodak
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NEW YORK (CNNfn) - Pressured by government officials who claim certain elements of its soon-to-be released Windows XP operating system are anticompetitive, Microsoft on Monday agreed to change its digital imaging features, giving users easier access to digital-imaging software from a number of providers, not just those affiliated with Microsoft.
The changes reflect a partial settlement of a dispute between Microsoft (MSFT: up $0.32 to $65.84, Research, Estimates) and Eastman Kodak (EK: up $0.26 to $43.91, Research, Estimates), which claimed Microsoft designed Windows XP to unfairly give preference to its own software and links to Microsoft-affiliated online photo-finishing services.
The Redmond, Wash.-based software company, which has been embroiled in an antitrust battle against the U.S. government since 1997, said it will modify the list of digital-imaging software choices users are presented with when they first attach a digital camera to a Windows XP-based computer.
Prior to the changes, users would be presented with Microsoft's "Scanner and Camera Wizard," which displayed a drop-down list of installed software that could be used to access the images on the digital camera. If users did not select a specific program from the list, the system would be configured with a Microsoft application as the default.
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Under the agreement, Microsoft said users attaching a digital camera to their Windows XP-based computers will automatically be presented with a list of all the available software that can be used in conjunction with the camera without having to select from a drop-down list.
Microsoft spokesman Jim Cullinan told CNNfn his company had listened to feedback from Kodak and characterized the change as a "minor modification."
Anthony Sanzio, a spokesman for Kodak, called Microsoft's agreement to make the changes to Windows XP "a positive move," although he said the company "still has concerns" about the new software. He would not elaborate.
The Rochester, N.Y.-based company had lobbied U.S. Sen. Charles Schumer (D-N.Y.), who last month urged the U.S. Justice Department to include Windows XP in its antitrust settlement negotiations with Microsoft and asked the state attorneys general who are also involved in that case to seek a court order blocking its release until the anticompetitive questions are addressed.
New York City-based AOL Time Warner (AOL: down $1.32 to $42.98, Research, Estimates), which has aligned with Kodak in an online photo finishing partnership, also had lobbied Schumer. The two companies work together to deliver AOL's users a "You've Got Pictures" premium service for viewing, sharing and storing photos online.
AOL is the parent company of CNNfn.
In addition to the change in the dialogue box, Microsoft agreed to clearly label its built-in photo software as its own and said it will work with Kodak to make sure Kodak cameras work easily with Windows XP, Kodak said.
A federal appeals court earlier this summer upheld a lower court's ruling that Microsoft is an illegal monopoly, but overturned its order that the company be split in two as a remedy for anticompetitive practices. Since then, Windows XP has come under fire on a number of fronts.
The new operating system, which originally had been set for release on Oct. 25 but now is expected to hit the market as much as a month sooner than that, integrates features such as instant messaging, streaming media and digital photography capabilities. Critics have said it is further evidence of Microsoft's anticompetitive practices.
Microsoft has requested a Supreme Court review of the antitrust case, which is set to be returned to the U.S. District Court in Washington this week. The company has asked that those proceedings be postponed until the Supreme Court decides whether it will hear the case.
Some trial watchers have characterized Microsoft's recent legal moves as part of a broader strategy to prolong the court proceedings and delay any antitrust actions, including a court-ordered block of the release of Windows XP, until after the product already is in the marketplace. 
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