Microsoft has agreed to make changes to Windows Vista's desktop search and indexing tool, but it did not concede, as Google charged, that the feature violated a 2002 antitrust settlement.
A previously scheduled 27-page joint status settlement report issued late Tuesday outlined the compromise. Under the agreement, Microsoft will change several aspects of search in Vista's Service Pack 1 (SP1), which will enter beta testing before the end of the year.
In Vista SP1, Microsoft will allow users and computer manufacturers to select a default search program by using the process already in place for choosing a default browser or media player. The company will also modify Vista so that the default search software is used to generate results in the Start menu and is a clickable option for searches run from Windows Explorer and the Control Panel. Currently, the default search for Vista is Microsoft's own Instant Search. The company also promised to spread the word to users, OEMs and software developers that Instant Search is designed to run in the background and give way to any other software, third-party searches included.
Developers will be given the information they need to optimize their Vista search software and minimize performance impact, Microsoft promised.
"Plaintiffs are collectively satisfied that this agreement will resolve any issues the complaint may raise under the Final Judgments, provided that Microsoft implements it as promised," said federal and state regulators in the report.
The move was prompted by a Google complaint filed late last year that accused Microsoft of designing Vista to discourage users from running other developers' indexing and search software. Google and Microsoft compete in several search areas, including desktop search, where the former's Desktop application has been available since October 2004.
Details in Tuesday's report revealed that Google's complaint revolved around whether Vista's search was a new feature, as Google claimed, or an extension of a feature in earlier editions of Windows, as Microsoft said. The point was important, since by the 2002 settlement agreement, for any new feature dubbed "Microsoft Middleware Product," Microsoft must help rivals build software that runs smoothly on Windows.
By compromising before a final judgment could be made by the Department of Justice and the 17 state attorneys general, Microsoft avoided a clear-cut ruling on search. "It was unnecessary for Plaintiffs to reach a joint resolution of the question whether desktop search is a new Microsoft Middleware Product under the Final Judgments," the joint status report read.
Apparently, there was disagreement among regulators about whether Google had made its case, although details were lacking. "The Plaintiffs were not able to agree whether these and other enhancements to existing desktop search functionality merely upgrade existing functionality or instead convert desktop search into functionality first licensed after entry of the  Final Judgment," the report said.
Last week, as Microsoft argued that regulators had already reviewed Vista's search features but also broadly hinted that it would consider changes, The New York Times reported that the Department of Justice had refused to pursue the Google complaint, and that Thomas Barnett, the assistant U.S. attorney general for antitrust, had in fact sent a memo to several state attorneys general last month also asking them to reject the complaint.
On Tuesday, however, Barnett talked tough. "Through a constructive and ongoing dialogue, the Department, the state Attorneys General, and the District of Columbia continue to ensure that Microsoft complies with all of its obligations under the final judgments," said Barnett in a statement.
In a separate statement, Microsoft's general counsel, Brad Smith, said only that "we're pleased we were able to reach an agreement with all the States and the Justice Department that addresses their concerns so that everyone can move forward."
Google could not be reached for comment.
A hearing before Judge Colleen Kollar-Kotelly, who oversees the consent decree, is scheduled for June 26 in U.S. District Court for the District of Columbia.