Microsoft admits paying for 'independent' ads

Supposedly aloof experts praised Microsoft's competitive practices last June -- but they were being funded by the software company itself.

Microsoft has confirmed that it paid for pro-Microsoft advertisements, which had been represented as coming from an independent point of view, according to reports published Saturday.

In a report in The New York Times, the newspaper quoted Greg Shaw, a public relations manager for the software giant, confirming that Microsoft paid for the cost of the supposedly independent advertisements, as well other expenses related to their publication. The ads, published as full pages in the Times and the Washington Post last June by the Independent Institute, in the form of a letter signed by 240 academic experts.

The Institute had said that Microsoft had no direct financial involvement with the ads, but the Times quoted internal papers billing Microsoft for the full cost of publication, as well as the expenses to promote the letter -- a total of $153,868.67 (£9838). The cost included a $5966 bill for Independent Institute president David Theroux and a colleague to fly first-class to Washington for the news conference promoting the ads, according to the Times.

A Microsoft spokeswoman says the company has been unfairly tarnished by public criticism following the disclosure. "The Institute has a long track record that pre-dates Microsoft funding. Microsoft was aware of the letter and contributed to making it public but that should not detract from the substantive stance of so many economists across the US."

Theroux has reportedly denied that Microsoft took any direct role in paying for the published letter, claiming that the software giant was only one of many dues-paying members of the Institute.

Matt Broersma contributed to this report