The software firm's changes are in response to a Federal Trade Commission investigation into the policies of Microsoft relating to its popular Passport Internet service. Privacy groups had claimed that consumer information was not being stored securely.
Brad Smith, senior vice-president and general counsel at Microsoft, said, "Consistent with our heightened security obligations, we accept responsibility for the past and will focus on living up to this high level of responsibility in the future."
Timothy Muris, chairman of the FTC, said, "Companies that promise to keep personal information secure must follow reasonable and appropriate measures to do so. It's not only good business, it's the law."
Microsoft has agreed to address privacy and security issues within Passport. Brian Arbogast, corporate vice-president at Microsoft, said, "At a high level, we are committing to not only meet a high bar for security and privacy for our service, but to prove that we are meeting the bar that has been set."
The FTC initiated its investigation of the Passport services following a July 2001 complaint from a coalition of consumer groups led by the Electronic Privacy Information Center (EPIC). The complaint focused on the fact that Passport did not provide adequate protection for consumer's e-mail addresses and credit-card details.