The Windows operating system is on more than 90 percent of the world's computers, which breaches European antitrust rules, European Union regulators have said.
Microsoft, instead, will offer Internet Explorer separately, Dave Heiner, Microsoft's deputy general counsel said in a statement on the company's Web site.
"This means that computer manufacturers and users will be free to install Internet Explorer on Windows 7, or not, as they prefer," Heiner said.
Windows 7 tentatively is scheduled for release in October.
EU regulators oppose Microsoft's bundling practices, where one piece of software is included free with another piece of software, which is sold, The Wall Street Journal reported Saturday.
In an antitrust ruling last year, Microsoft was fined for failing to provide competitors with technical information on its Media Player software, the Journal said.