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Microsoft prepares for on-line retreat

Microsoft, under siege from anti-trust investigators in the United States, is reportedly preparing to uncouple its proposed new on-line service from the latest version of its Windows software system, due out next month.

The US Justice Department announced last month that it was investigating plans for the Microsoft Network, a new on-line provider system that the company had hoped to include as an integral part of the much-vaunted Windows 95 when it goes on sale at the end of August.

Other on-line providers, such as CompuServe and Delphi, owned by Rupert Murdoch, fear that the innovation would give Microsoft an unfair advantage in the increasingly lucrative on-line market. The Windows system is believed to be used in four-fifths of all personal computers worldwide.

It is apparently in anticipation of a Justice Department injunction that Microsoft, which is run by the tycoon Bill Gates, is making contingency arrangements to launch a pared down version of Windows 95, without the on-line feature.

"We would be naive not to think through the possibilities," a senior vice president, Brad Silverberg, told the Wall Street Journal. "If Justice were to tell us to remove the code or modify the product in some way, we would have to consider how we would do that and see what impact that would have."

By preparing ahead of time, Microsoft is hoping to ensure that at least the Windows 95 launch date can be preserved, even if the debut of Microsoft Network cannot. Mr Silverberg insisted, however, that the Network code would be removed only on the basis of an injunction, not voluntarily.

The investigation by the Justice Department into Microsoft's plans for on-line services is the third targeted at the company in quick succession. Earlier this year, Mr Gates was forced to abandon plans to purchase the Intuit Corporation, developer of highly successful home-banking systems.

Last week, Republican presidential hopeful, Senator Bob Dole, publicly berated the Justice Department, suggesting it was unfairly making a victim of Gates and his company.