Countering pressure from European regulators, Microsoft Corp plans to ship the newest version of its Windows operating system in Europe without its Internet Explorer web browser.

The abrupt reversal comes shortly before the European Commission is due to rule on antitrust charges brought against Microsoft in January, claiming that the world's largest software company abuses its dominant position by bundling its Internet Explorer browser, shielding it from head-to-head competition with rival products.

Until now, Microsoft has claimed that the browser was an integral part of the operating system and should not be pulled out, but it now plans to do that for a European version of Windows 7, due to be rolled out later this year.

Given the pending legal proceeding, we've decided that instead of including Internet Explorer in Windows 7 in Europe, we will offer it separately and on an easy-to-install basis to both computer manufacturers and users, said Microsoft Deputy General Counsel Dave Heiner in a blog post on the company's website on Thursday.

European regulators, which had suggested Microsoft offer a choice of browsers on its operating system to open up choice for consumers, gave a frosty response.

Microsoft has apparently decided to supply retail consumers with a version of Windows without a web browser at all, the European Commission said in a statement reacting to Microsoft's move. Rather than more choice, Microsoft seems to have chosen to provide less.

The Commission is still weighing whether Microsoft's bundling of the browser has been abusive, and what sanctions to bring as a result. It is still possible that the Commission will force Microsoft to include other browsers with its operating system, a move the company has been determined to avoid.

GOOGLE, OPERA COULD BENEFIT

Microsoft's move could yet be a boon for competing browser makers such as Google Inc, the Mozilla Foundation and Opera Software, whose complaints spurred the European Commission case against Microsoft.

Microsoft's Internet Explorer browser is used for about 60 percent of global Internet traffic, Mozilla's Firefox has about 30 percent, and Opera is at 4 percent, just ahead of Google and Apple Inc's Safari, according to Web analytics firm StatCounter.

Microsoft's shares rose 1.2 percent to $22.83 on Nasdaq, while Google's fell 0.8 percent to $429. Shares of Norway's Opera closed up 7.1 percent in Oslo.

Microsoft has a long history of wrangles with regulators over how it packages its own applications with its Windows operating systems, which run more than 90 percent of the world's personal computers.

In the last five years, it has been fined more than $2 billion by the European Commission for violations and failing to carry out remedies over the bundling of its Windows Media player.

In 2000, a U.S. judge decided that Microsoft had broken the law after it combined its Internet Explorer browser and the Windows operating system. The most serious violations of the law were upheld on appeal, but the company continued to bundle its operating system and browser.

(Reporting by Bill Rigby, editing by Gerald E. McCormick, Steve Orlofsky and Richard Chang)

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