Microsoft risks anti-trust battle over XP

Microsoft is yet again on the verge of finding itself in anti-trust hot water over a feature in its XP software, which could restrict which websites users access.

The feature, known as Smart Tags, points users of one application to relevant information within another or - crucially - to related content on the web.

In a move which smacks of the IE bundling tactic which last aroused the interest of the Department of Justice, Smart Tags will be included in Office XP, and is also being considered for the XP operating system itself.

The concern is that Microsoft will control the information users get to see, and as a result drive traffic to its own websites or those of its commercial partners at the expense of its dot-com competitors.

For example, a stock ticker symbol written within Excel could immediately offer a link to the shares page on MSN - potentially a very useful 'feature' for users, but some would say one which is open to manipulation.

Dan Kusnetzky, VP of research firm IDC, said: "This raises potential competition issues, privacy issues and certainly security issues. This type of approach goes right to the heart of the problems people have with Microsoft and the way it does business."

Ian Bramley, managing director of analyst house Software Strategies, said there would be serious worries about Microsoft's use of this technology.

He added: "We will need to see how they use it - and this will determine whether they get into a monopolistic or abusive situation again."

However, not everyone believes the software giant is behaving unfairly. Tim Jennings, senior research analyst at Butler Group, said Smart Tags were a useful innovation. "When a firm is as dominant as Microsoft is, there are always competition issues. But this looks like a reasonable course of action," he claimed.

Microsoft was unable to comment.