There has been mounting pressure after a panel of European privacy regulators, known as the Article 29 Working Group, asked Microsoft, Yahoo, and Google to take these steps in 2008.
Immediately afterwards Google responded by agreeing to anonymise users' IP addresses after nine months.
Last year Microsoft had stated it would anonymise IP addresses after six months, but like the other big players, it has been holding on to the data for 18 months.
Article 29 Working Group met with the three big search engine companies last February and gave them until the end of this month to respond.
Both Google and Yahoo have said they need to keep some data for longer than six months to refine their search engines. Microsoft has said it will bring in the changes over the next 18 months.
18 months to implement
With 32 per cent of all Internet search queries, according to Comscore figures, Europe is the world's largest search market.
At a news conference in Brussels, Microsoft Vice President and Associate General Counsel John Vassallo said: "We support what the Article 29 Working Group is doing. That is why we are making this change. We call on our competitors to do the same."
Vassallo admitted that Redmond had taken the step to try and head off possible new laws.
"It is possible that the European Union will take a position to regulate this one way or the other. That would need a high level of responsibility from industry," he stated.
"I hope by taking this example we are showing the way. If that happens, we will see less risk of a new regulation."
Via New York Times
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