Timely Release of Windows XP May Hinge on Courts.

You know you've reached the big time when your marketing strategy shows up on the to-do list of all three branches of the federal government.

Microsoft Corp.'s newest operating system, Windows XP, is supposed to reach the shelves of your local electronics superstore on Oct. 25. But before that happens, federal prosecutors, the courts, the Federal Trade Commission and even Congress could step in to try to block distribution of a product they haven't even seen yet.

On its face, it all seems ridiculously premature. But when you realize the sort of power grab Microsoft is attempting, these early efforts seem more reasonable.

Windows XP will serve as a platform for the company's so-called ".NET Initiative," which aspires to impose a protective layer of Microsoft between computer users and the Internet. Apparently, the company's monopolies over the markets for PC operating systems and Web browsers aren't profitable enough. With Windows XP, Microsoft hopes to profit from every move its users make on the Internet.

The effort relies on a user identification system called Passport. Windows XP buyers will be cajoled and coerced into entering their names, e-mail addresses, telephone numbers and even their photographs into their Passport in order to gain access to online services. An associated service, the Microsoft Wallet, is used to store users' credit card numbers and other sensitive financial information.

Passport and Wallet are currently available from Microsoft's Web site and through its Hot-mail e-mail service. As a result, the company has compiled sensitive information from more than 100 million Internet users, creating the world's largest commercial database of Internet users. Those numbers will grow exponentially if the services are embedded in the Windows operating system.

Passport and Wallet give users quick access to password-protected Web sites and an easy way to spend their money online. But for Microsoft, the services offer the ability to track users' surfing and shopping habits and an opportunity to collect money from retailers and publishers when Passport and Wallet users hit their home pages.

Windows XP also attempts to use Microsoft's operating system monopoly to gain control of other new markets, including online photo developing and copyright management for digital media like music and video files. If the company is successful, it will be in a position to charge content companies every time a Windows XP user downloads a video or a song -- not bad work if you can get it.

The company's competitors have convinced the Senate Judiciary Committee to schedule hearings on Windows XP next month. Sen. Charles Schumer, a New York Democrat who serves on that committee, also has urged federal prosecutors to seek to block distribution of Windows XP unless Microsoft scales back its plans to bundle online services with the operating system.

The Justice Department and several of the state attorneys general who pressed the original antitrust case against Microsoft are considering doing just that. But as The Washington Post reported recently, some of those lawyers may want to see the product hit the streets as an example of Microsoft's hubris. If the courts see that the company has continued to engage in anticompetitive practices, it might impose a stiffer penalty for the original antitrust violation.

Privacy advocates, meanwhile, have reviewed prerelease versions of Windows XP and complained to the Federal Trade Commission that it will mislead consumers. The complaint says Passport's privacy policy doesn't clearly warn that affiliated Web sites may make different use of personal information than Microsoft itself. It also says Windows XP will male it seem that creating a Passport is a prerequisite to accessing the Internet itself.

Whether any of these federal threats amount to anything remains to be seen. Senators may huff and puff, but they're not likely to take any meaningful action a month before the release of Windows XP. And given the FTC's reluctance to crack down on anything but the most obvious online scams, I can't imagine the privacy complaint will merit even a line in Microsoft's day planner.

But a federal judge could put a serious crimp in Microsoft's plans. If state or federal prosecutors press to block the release of Windows XP, the company might be forced to wait until after the Christmas season to start stuffing its Passports down the chimneys of Internet users.