Privacy groups have welcomed the European Commission's decision to investigate whether Microsoft's system of collecting personal information from internet users breaks privacy laws.

Dutch MEP Erik Meijer has raised questions about the software giant's .Net Passport service, which is designed to act as a single point of authentication for users when browsing the net.

According to a statement from the Commission, an investigation will look at whether the service is compatible with EU data protection laws.

The investigation could reveal flaws with any attempt to establish online authentication systems, said Simon Davies, head of watchdog group, Privacy International.

Legal implications

The privacy stakes are too high to allow Microsoft to control the standard,

Simon Davies, Privacy International

"It is a tremendous opportunity to test the rigour of EU law and whether any technical standard for a global identity system can be established easily under European privacy laws," he said.

"There are profound legal implications about the flow of information across the world and the privacy stakes are too high to allow Microsoft to control the standard," he added.

US privacy groups have hounded Microsoft since the launch of .Net Passport in 1999.

Last year, an affiliation of US privacy groups asked the Federal Trade Commission to block the launch of Windows XP because of its tie-in with Microsoft's suite of .Net products.

Microsoft is already involved in an EC investigation for allegedly designing its Windows operating system to work better with its own server software than those of its rivals.