Microsoft has decided to delete from its next version of Office an automatic way to save documents in PDF (Portable Document Format) after Adobe threatened to take legal action.

"We offered to them that we would do this, and now we've unilaterally made the decision to do it," Microsoft spokesman Jack Evans said on Friday. The company also will remove a feature to save documents as XML Paper Specification (XPS) files in Office; XPS is Microsoft's rival to the PDF file format.

Adobe had threatened legal action against Microsoft in Europe over its use of Adobe's PDF, which allows users to create electronic documents. It's unclear whether that action will be in the form of a complaint to the European Union or a formal antitrust suit, sources close to Microsoft said. Adobe spokeswoman Jodi Warner said Friday that Adobe "has made no determination" whether it will take action.

The dispute began in February when Adobe raised concerns over Microsoft's plans to offer a "Save as PDF" feature in its Office 2007 suite. Beta versions of the software with this feature are already available.

With the change, users who purchase the final Office 2007, due later this year, will have to separately download free software to save documents created in Office applications as PDF or XPS files, according to Microsoft.

Microsoft says Adobe wants its software to be removed from Office and offered separately for a fee, and the companies had been trying to work out a compromise.

"We have taken a number of significant steps to accommodate Adobe and offered many proposals in an effort to avoid a dispute," Evans said. "But we have now reached a point where we feel what they are asking for is not in the best interest of our customers."

Adobe's Warner said Microsoft is an important partner for Adobe but the company remains concerned about its monopolistic practices. "As our CEO Bruce Chizen has stated publicly numerous times in the past, Microsoft has a monopoly, and we are always concerned about the possibility that they might abuse that monopoly," she said.

Other changes Evans said Microsoft offered to pacify Adobe included shipping Adobe's Flash and Shockwave software with every copy of Windows Vista and giving OEMs (original equipment manufacturers) the option to remove XPS from Windows.

Still, Adobe wants Microsoft to take even stronger moves to "charge customers a price for using what everyone else in the world can use for free," Evans said.

News of possible legal action by Adobe in the EU was first reported Friday in the Wall Street Journal.