The announcement Wednesday comes after the European Commission fined Microsoft $357 million last week for not moving fast enough to open its product to competition, The Washington Post reported.
"This is the responsible thing for us to do," Brad Smith, the company's general counsel, said. "Users have control of their PCs. Users decide what remains."
Vista, as the upcoming Windows operating system is known, will not impose default settings for Microsoft's MSN search engine on the Internet Explorer browser and that users will be able to decide if they want a Google or Yahoo! search box built into the browser instead.
Also, the software company plans to license more of its patents to third parties and support industry standards to make its products more compatible with competitors.