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Microsoft Settles With FCC Over Claims in WebTV Ads

October 26, 2000|From Bloomberg News

WASHINGTON — Microsoft Corp.'s WebTV unit on Wednesday settled federal charges that it misled consumers by claiming its TV-based Internet browser gave viewers the same capability to surf the World Wide Web as computer users.

In a settlement with the Federal Trade Commission, WebTV Networks Inc. agreed to distribute consumer-education brochures and advertising to correct any impression that the television-based Web-browsing service provides the same access to the Internet that consumers could get via a personal computer.

The Microsoft unit also agreed to reimburse some consumers for long-distance charges they didn't expect to incur for connecting to the Internet via WebTV.

In its administrative complaint, the FTC charged that WebTV, acquired by Microsoft in 1997, didn't adequately warn consumers that they could have to make a long-distance telephone call to connect their TV-based Web browser to the Internet.

Some consumers incurred hundreds of dollars in long-distance charges, said Joel Winston, the FTC's director of advertising practices. Those who canceled the service within 90 days and cited the charges as a reason will be reimbursed, the FTC said.

The company agreed to prominently warn users that they may have to pay long-distance charges for Internet access.

The FTC charged that ads from 1997 and 1998 that claimed WebTV provides "complete . . . Internet access" were false or misleading because the TV-based Web browser didn't provide access to the same games, "streaming video" and other entertainment that is available to personal computer users.

Microsoft spokesman Vivek Varma said that while the company "may disagree with some aspects" of the FTC's analysis of the advertising issues, "we have agreed to disagree."

The consumer-education brochures, which will be distributed at stores where the WebTV set-top boxes are sold, will advise consumers about the different Internet-browsing capabilities of personal computers and other devices, the FTC said.

WebTV, based in Mountain View, Calif., had more than 1 million subscribers last year.

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