A Financial Times story today raised new concerns about the potential for Microsoft's Windows 7 Release Candidate to give Internet Explorer 8 an unfair advantage over Firefox, Opera and other rival browsers, because of Microsoft's recommended installation instructions for the preliminary version of the operating system.

But as I looked into the situation today, executives with Opera Software and Firefox maker Mozilla downplayed that specific issue and said they remain more concerned about Microsoft's distribution of Internet Explorer through the automatic updating mechanism in existing Windows versions.

"It isn't a Windows 7 problem; it's the IE update getting pushed automatically through Windows update, and then the choices being written in a way that will tend to drive people back to IE," said John Lilly, Mozilla chief executive, via email this afternoon.

Mozilla and Opera contend that Internet Explorer is a product in its own right, and that Microsoft shouldn't be allowed to use Windows to give its browser an edge over competing programs. Microsoft has long contended that Internet Explorer is an integral component of Windows, so it's proper to push out upgrades through the same Automatic Updates mechanism used to distribute security patches.

The issue is which browser is set as the default. Microsoft says that the Automatic Updates process provides clear ways for users to keep Firefox, Opera or another browser as their default even after the new Internet Explorer is downloaded. At the same time, the process also provides those users opportunities to switch away from another browser to Internet Explorer.

"Users continue to have complete control over IE8 settings and behavior throughout the first-run experience and ongoing use," wrote Eric Hebenstreit, IE lead program manager, in a blog post last week. "For example, if IE is not the default browser in Windows, the option to change this setting is presented in a wizard that runs the first time IE8 is launched."

Hakon Wium Lie, Opera's chief technology officer, cited problems with the process. "Most users who don’t reads the small print and just choose express update will reset their choice of browser," he said via phone this afternoon.

Responded a Microsoft spokesman via email today: "Microsoft never overrides browser defaults; the user is informed and consents. If you are upgrading to Internet Explorer 8 and use the Express Settings, the user will see that there are several pre-defined settings, many of which are optimized for safety and reliability, including Internet Explorer 8 selected as your default browser."

Users can unselect Internet Explorer 8 as part of that process, but Opera contends that many people won't notice or take the time.

As for the Windows 7 Release Candidate, the Financial Times said the problem centers on Microsoft's recommendation that people testing it make a clean installation, starting from scratch rather than upgrading and preserving existing programs. Reported the FT:

Microsoft's rivals claimed PC users who upgrading their machines to the new operating system have Microsoft's own IE8 set as their default browser, even if they were previously using a different company's software. ... However, Microsoft indicated that this only applied to the recommended method of installing the test version of Windows 7, and was unrelated to the experience most users would have when the new operating system is officially released.

Opera's Lie said the company does object to Windows 7, but it's essentially same objection it has against existing versions of Windows. Opera contends that Microsoft shouldn't be allowed to bundle Internet Explorer in the operating system.

Acting on a complaint by Opera, the European Commission in January issued a statement of objections giving "the preliminary view that the inclusion of Internet Explorer in Windows since 1996 has violated European competition law."

Microsoft disagrees and responded to that preliminary finding last month, seeking a hearing.