The state officials said in a joint statement they would continue to investigate the Office allegations but dropped them from the current case against the world's leading software company because of "time and witness limitations set by the court for the September 8 trial."

Instead the states will focus on charges that Microsoft has abused a monopoly position in computer operating systems to gain similar power in the Internet browser market and eliminate the threat posed by rival Netscape Communications Corp. "We believe the strategy behind Microsoft's business tactics was to protect the enormous profits generated by its Windows operating system monopoly from the competitive threat posed by Internet Web browsing technology," New York state attorney general Dennis Vacco said.

A Microsoftspokesman said the dropped charges were a "very positive development" for the company.

"We're pleased that the states have withdrawn these groundless allegations, but it's troubling that the allegations were ever made in the first place given the apparent lack of evidence," spokesman Tom Pillahe said.

The states, joined by the district of Columbia, said the amended complaint "tightens the focus" of their lawsuit, filed May 18 along with a similar lawsuit by the US department of justice. The state's claim that Redmond, Washington-based Microsoft had illegally attempted to maintain a monopoly in the market for basic business software was one of the most significant differences between its suit and the federal case, which did not mention Office. The federal and state cases have been consolidated for the September 8 trial in US district court in Washington.

The states also have dropped a charge that Microsoft illegally tied distribution of Windows and basic applications including Outlook Express.

Stateofficials said they planned to serve Microsoft with subpoenas in the next week as part of the investigation of the market for Office software, which includes basic business applications for word processing, spreadsheets and presentations.