Microsoft moved a few steps closer to appeasing European antitrust regulators yesterday, but their intercontinental legal dance may go on...

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Microsoft moved a few steps closer to appeasing European antitrust regulators yesterday, but their intercontinental legal dance may go on another week or more.

The two parties are slowly working through a list of disagreements over how Microsoft will comply with sanctions imposed last March, after the European Commission found that the company violated European antitrust laws.

Most of the haggling has centered on a special version of Windows — with Windows Media Player removed — that Microsoft must sell in Europe. The company agreed to a few changes yesterday but said more negotiating is needed before the system is ready for sale.

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“Certainly from our perspective we want to move forward as fast as possible,” said Brad Smith, the company’s chief lawyer.

In a letter sent to the commission yesterday, Microsoft agreed to fix glitches that surfaced after the company removed 186 files specified by the commission, the executive arm of the European Union. Competitors had flagged the problems, contending that Microsoft should have made sure the system performed well even without those files.

Microsoft also agreed to make the files available for download, in case European buyers of the stripped-down system decide they want the extra bits after all.

At the panel’s request, the company also will change the software packaging, which warned consumers that applications such as Office and Encarta wouldn’t work properly with the system.

The stripped-down system was supposed to give competing digital media companies a better chance of competing against Microsoft, which has an advantage because of its monopoly on PC operating systems.

But the glitches prevented some competing products from working properly.

Seattle-based RealNetworks was among the companies that took issue with the system design, because the glitches affected the performance of its media-player software. The panel provided RealNetworks with an early copy for testing.

Microsoft had removed key items from the system-registry component of Windows affecting, in particular, a file that supported competing media formats. In doing so it violated its own guidelines for Windows programmers, said Dave Stewart, deputy general counsel of RealNetworks.

Stewart said the move was also a “flagrant violation” of the commission’s order, which says the stripped-down system must be fully functional.

“They know how to do it — it’s not a matter of ability, it’s a matter of will,” he said.

Smith said the company removed files as directed by the commission and some of those files affected registry settings. Yesterday, the company agreed to make the registry work better without those files. The registry is a crucial, central database within Windows that stores system configuration information.

“That’s neither here nor there,” Stewart said, “because in addition to removing the files, they’ve got to ensure the resulting operating system is fully functioning.”

On Monday Microsoft agreed to name the system Windows XP Home (or Professional) N, a name chosen by the commission.

The company had originally proposed calling the software Windows XP Reduced Media Edition, but regulators worried that name would scare away buyers. Regardless of the name, industry analysts doubt many will buy a system with fewer features but the same price as Windows XP.

Earlier, Microsoft tried to delay shipping the system and complying with other sanctions altogether while it appeals the antitrust case, but a European judge rejected that move in December.

Smith said the latest delays are not the result of Microsoft being persnickety about the sanctions.

“What we’re dealing with is a series of highly technical issues, a process that no one has ever attempted before — the European Commission is designing a software specification and we are trying to build a product that conforms with the specification they give us,” he said. “To some degree some level of back and forth is inevitable whenever you have something this complex and novel.”

Stewart scoffed at suggestions the project is delayed by complexity.

“This isn’t new. Microsoft’s had a long-held strategy of delay in this proceeding and in the other legal proceedings that go to the anti-competitive aspects of their business model.”

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