Microsoft, HP settle war of tiny words

The US Federal Trade Commission announced Tuesday that it has settled charges of unfair and deceptive advertising against Microsoft (MSFT) and Hewlett-Packard (HWP) .

The commission had filed complaints against the two companies saying that a joint advertising campaign for HP's Jornada Pocket PC personal digital assistant misled the public. The FTC said the campaign - which ran with the logo "Can Your Palm Do That?" - led people to believe that the Jornada Pocket PC PDA was Internet-ready, when in fact it wasn't unless buyers also purchased additional equipment, such as a modem. The commission held that the fine-print disclaimers that ran with the ads were insufficient.

"Consumers are faced with so many choices when they shop for handheld computers, and they often rely on advertising claims when they decide what PDA to buy," FTC official Jodie Bernstein said in a statement. "The legal standard for disclosures is 'clear and conspicuous.' Consumers shouldn't have to use a magnifying glass to read them."

The proposed consent agreements bar the two companies from engaging in similar practices in the future. Beyond the agreement, Microsoft and HP are voluntarily mounting public education campaigns about personal digital assistants. Both companies are disseminating factual brochures, and Microsoft will run quarter-page advertisements in several major daily newspapers, according to the FTC. Neither company has admitted any wrongdoing.

"We are pleased to have resolved this matter with the FTC," said Microsoft spokesman Jim Desler. "This issue is really about the size of our disclosures."

Both companies said the fundamental issue was the print size of the disclosures, which they enlarged last year as soon as the FTC made its displeasure known.

"Because we value our record of integrity and customer satisfaction, we voluntarily withdrew the ads for the HP Jornada Pocket PCs after learning of the FTC's concerns," said HP spokesman Boris Elisman in a statement. "However, HP believes that the advertisements were accurate."

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