Microsoft has vowed to fight back against the launch of a new web browser by arch-rival Google, promising new features for its market-leading Internet Explorer and putting itself on alert for a challenge to Google on competition grounds.

Internet users in 100 countries were yesterday able to download Google's Chrome, which is said to be less likely to crash and more efficient in running complicated applications.

Google shares jumped on the news, which analysts said was a step towards its aim of displacing Microsoft as the lead provider of applications such as word processors, spreadsheets and other office software. Google offers a suite of such office products that users access free over the web, rather than buy and install on their PCs.

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Microsoft immediately highlighted a new test version of Internet Explorer, which is used by three-fifths of internet users, and which it says will win over users concerned about their privacy on the web. Dean Hachamovitch, general manager of Internet Explorer, said: "People will choose Internet Explorer 8 for the way it respects their personal choices about how they want to browse and, more than any other browsing technology, puts them in control of their personal data online."

Microsoft has become increasingly willing to challenge Google for acting anti-competitively, and insiders will examine whether Google oversteps any legal boundaries with the way it links its browser, its core search engine and its new office software.

Microsoft itself is still reeling from competition assaults in the US and Europe which prevented it from bundling Internet Explorer with its Windows operating system.

Google has previously been backing Mozilla's Firefox as an alternative to Internet Explorer, and Firefox is the second most popular browser.