Microsoft has agreed to change its licensing agreements with computer manufacturers - several years after the issue prompted the company's long-running battle with the US government.
It is to allow personal computer manufacturers to remove the Internet Explorer icon from its Windows desktop and add those of other companies for the first time.
Microsoft's decision comes two weeks after a US appeals court upheld the ruling that its behaviour was tantamount to illegal monopoly maintenance.
In a rare public admission of wrongdoing, Steve Ballmer, the company's chief executive, said: "We recognise that some provisions in our existing Windows licences have been ruled improper, so we are providing computer manufacturers with greater flexibility."
The change will come into effect immediately, so that manufacturers can choose which icons to display when they produce machines using Windows XP, the latest version of Microsoft's operating system.
Until a few years ago, Microsoft forbade computer manufacturers from changing the desktop in any way. Those that argued faced the threat of delays in receiving the company's operating system, used on more than 90% of the world's computers.
Microsoft's refusal to allow manufacturers to change their desktops or start-up menus to include the internet browser icon of its rival, Netscape, first raised the ire of regulators at a time when the company was meant to be abiding by an earlier court injunction.
A US district judge ruled that the company had illegally maintained its stranglehold over the world's computer market by insisting that manufacturers abide by its rules. The US appeals court agreed with this decision, but overturned two other findings.
In the past year, manufacturers have been allowed to add rival icons, but not to remove the Internet Explorer icon.
Mr Ballmer denied yesterday that his latest move was an attempt to kick-start settlement talks, but made a conciliatory statement. "This announcement does not take the place of settlement discussions with the government parties, or any future steps in the legal process," he said. "However, we wanted to take immediate steps in light of the court's ruling. We are hopeful we can work with the government parties on the issues that remain after the ruling."
But the company's opponents said the changes did not go far enough. Ken Wasch, president of the trade Software and Information Industry Association, said: "Microsoft's anti-trust troubles can't be solved by adding or removing a few icons from the desktop. This is a death-row conversion by Microsoft in an effort to derail more serious discussions. It may be a step in the right direction, but it certainly doesn't go far enough."
Kevin Arquit, an attorney who has advised ProComp, an anti-Microsoft trade group, said: "My reaction is that Microsoft is only doing what the court decision required them to do anyway."
The company insisted yesterday that the changes would not delay the proposed October 25 launch of Windows XP - an abbreviation for Experience. Its plans for XP have already been sharply criticised by its rivals and consumer groups. Until last night, Microsoft had insisted that all computers installed with XP must show a clean desktop, free of icons. Such an edict flew in the face of the court of appeals ruling.
The desktop is felt to be vitally important by the computer industry, as most consumers do not want to have to go to the bother of changing the one installed by the manufacturer. Microsoft, which insisted on its version of an internet browser icon being included on all desktops during its war with Netscape, now enjoys a leading share of the browser market.
