Windows XP may be Microsoft's passport to trouble.

A new feature introduced in the latest test version of Microsoft's Windows XP operating system requires people to establish an account with the software maker's Passport authentication service to use new instant messaging and telephony features.

The beta--one of the last before a widely anticipated preview release--introduces to Windows XP support for Microsoft's .Net software-as-a-service initiative.

Critics argue that by using Windows XP to encourage Passport account sign-ups, Microsoft is drawing on its dominance in operating systems to gain a foothold in the nascent market for online services and subscriptions. Passport integration raises the specter of antitrust hanging over the operating system, they contend.

"There are very real consumer issues with Passport, HailStorm and .Net taking away consumer choice," said John Buckley, a corporate vice president for AOL Time Warner. "Trying to dominate in new areas leveraged off the desktop monopoly is a prescription for future trouble for them."

Microsoft has long contended that it has a right to bundle products with the operating system. In the case of Passport specifically, the company says it is meant to be "unobtrusive," and consumers can choose not to use it.

ProComp, a trade group whose members include Microsoft rivals AOL, Oracle and Sun Microsystems, has issued a white paper criticising Microsoft's .Net, HailStorm and Passport integration plans.

The 61-page document contends that Microsoft is trying to gain an "identity monopoly" through Passport. The group also attacks Microsoft's broader goals with .Net and HailStorm, arguing, "Windows XP is designed to force adoption of Microsoft's Web services."

ProComp's announcement follows Wednesday's criticism of Microsoft's Web services plans by two of the state attorneys general who spearheaded the antitrust case against Microsoft. US state Attorneys General Richard Blumenthal and Tom Miller said the software giant "may be repeating its efforts to maintain and extend its monopoly" by bundling features into its newest operating system.

But some Windows XP beta testers defend the software giant, praising the advantages offered by Passport integration and spurning insinuation that the company is forcing them to sign up for accounts.

"There will always be those people who feel that they are being bullied into signing up for a Passport account," said Pete Kovacevic, a longtime Windows user from Tucson, Ariz. "I think that this is a mind-set because of the name Microsoft. However, the advantages, I believe, outweigh that sort of thinking."

Signing up for Passport--Microsoft's authentication service supporting .Net--is mandatory for use of some new features introduced with XP, including the Windows Messenger communications software. People have the option to log in to their PCs and online Passport accounts simultaneously.

Some analysts and legal experts see nothing as innately anticompetitive about Passport's inclusion in Windows XP.

"It's tough to say there's anything inherently anticompetitive about integrating more into the operating system," said Andy Gavil, an antitrust professor at Howard University School of Law. "Even a monopolist has a right to compete."

Forrester Research analyst Bob Zurek agreed.

"I don't see it as squashing innovation," he said. "I can see it as a positive thing as long as the consumer knows what's going on. You've got to pay the toll to use some features, and Passport is the tollgate."

The dot in .Net
The first .Net building block, HailStorm, relies heavily on Passport, which Microsoft has used for some time for its MSN Messenger and Hotmail services. Passport is supposed to be a universal gateway to a variety of services--some free, others for a fee--delivered by Microsoft and third-party service providers. People sign in once, with immediate access available to any Passport-authenticated service or Web site.

Microsoft's use of Windows XP as an asset makes sense, said Directions on Microsoft analyst Matt Rosoff.

"Microsoft is basing its entire future business strategy on Web services," he said. "But in order for this strategy to succeed, Microsoft must first demonstrate that its own Web services are successful...By building Passport functionality into Windows XP, Passport instantly reaches millions of users."

But reaching those millions via Windows--a monopoly product according to US District Judge Thomas Penfield Jackson's antitrust ruling--is anticompetitive, some Microsoft rivals say.

"I'm not surprised at all; they're doing it because it's a great way to control their customer base," said Anne Thomas Manes, director of market innovation for Sun. "They own your identity and therefore can control you through that. I'm surprised the DOJ doesn't look into what that's about, what that means in terms of their monopoly."

ProComp, in its white paper, wrote, "Windows XP does not just directly promote Microsoft Passport--it does so exclusively."

Legal sources said that, at least for now, the Passport integration violates no laws.

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