Chinese bloggers who use Microsoft's new Web portal to post messages captioned "democracy,'' "capitalism,'' "liberty'' or "human rights'' are greeted with a scolding response.

A bright yellow warning appears: "This message includes forbidden language. Please delete the prohibited expression.''

The restrictions were agreed upon by Microsoft and its Chinese partner, the government-linked Shanghai Alliance Investment. But the forbidden words have sparked a debate in Beijing and in the online world about how free speech could be threatened when the world's most powerful software company forges an alliance with the largest communist regime.

Multinational companies from cigarette makers to baby formula companies routinely change their advertising and other corporate behavior to adapt to local laws. Experts say that Internet companies such as Microsoft are often flashpoints for controversy because their products are linked to free speech issues and many rules governing blogs and electronic speech are evolving.

"There's a spectrum here,'' said Jonathan Zittrain, co-founder of Harvard's Berkman Center for Internet & Society, and an author of a recent study on Internet censorship in China. "It's one thing to provide a regime with steel, another to provide bullets, and another to serve as the executioner.''

Officials with Microsoftargue that the software giant is only following local laws and that any disadvantage is outweighed by benefits users get from the software giant's services.

``Even with the filters, we're helping millions of people communicate, share stories, share photographs and build relationships,'' said Adam Sohn, Microsoft's global sales and marketing director. ``For us, that is the key point.''

Company product manager Brooke Richardson said ``MSN abides by the laws, regulations and norms of each country in which it operates.''

Microsoft points out that filtering objectionable words is nothing new. Even in the United States, the company prevents several words from being used in titles, including ``whore'' and ``pornography.'' Yahoo and Google, two other large technology firms, have had to limit their search results in France and Germany, where Nazi propaganda and memorabilia are banned.

In China, computer users often find that filters on Yahoo and other search engines prevent them from accessing pages on topics deemed sensitive by the Communist Party.

Human rights groups, including Reporters Without Borders, say Microsoft is sacrificing free speech principles in its headlong quest for profits and that the company should follow a higher standard.

``No one should break the law, but at the same time we all believe in universal values,'' Julien Pain, head of the group's Internet monitoring group, said. ``If China required underage children to work, would you do it? Free speech is not an American value or a French value. It's a human value.''

China has in recent months tightened its grip on the Internet and other media, as well as on scholars and others seen deviating from the Communist Party line. The nation's 150,000 journalists were recently instructed to attend a one-week ideology course, according to media reports. And last month, the government announced new rules requiring that all Web sites in China be registered.

The debate raises questions about whether multinational companies have a duty to help promote political freedoms in a world where their power and global standing rival many governments. Previous debates over corporate conduct have focused on environmental issues, fair wages and working conditions.

If international firms do not act roughly the same in various markets, they leave themselves exposed to charges of hypocrisy, said David Vidal, research director on global corporate citizenship at the Conference Board, a not-for-profit group that advises management. ``It's obvious that the biggest test case of this will be China,'' he said.

Microsoft, along with many of its rivals, has made no secret of its keen interest in China's nearly 100-million Internet users and a software industry that has grown 380 percent since 2000, according to government statistics.

Microsoft chairman Bill Gates and chief executive Steve Ballmer have made repeated trips to China in recent years, helping to strengthen the company's relationship with top Chinese leaders in a country where connections are often vital in securing deals. Microsoft's partner in the MSN China venture, Shanghai Alliance, is run by a son of former president Jiang Zemin.

As part of its marketing campaign, Microsoft has donated software to state-run China Telecom and China's State Economic and Trade Commission. It has pledged to invest or donate US$10 million (HK$78 million) to the country's primary education. And it has offered to provide free Windows operating systems to government officials in Beijing for three years in return for its becoming an exclusive software provider.

Microsoft blogging service, MSN Spaces, has attracted five million users, the company said. The service was launched in China with the MSN China portal May 26. Computer users frequent the portal for e-mail, shopping, games and English classes.

But Microsoft has agreed to restrict words on the site by using guidelines outlined by Communist Party. Many terms banned in the subject lines of postings on Spaces are not surprising: ``Dalai Lama,'' ``Tibet,'' ``Falun Gong,'' a religious group outlawed by Beijing, and ``June 4th,'' the way Chinese refer to the Tiananmen Square crackdown.

But the filtering appears to be arbitrary. Even as ``demonstration'' and ``violent chaos'' are blocked, ``riot'' and ``violent uprising'' are not. While ``separatism'' is forbidden, ``independence'' is fine. And some terms are allowed in the body of a message, but not in the headline.

Microsoft is hardly alone in restricting content on Web sites. Yahoo, Amazon, eBay and a host of Western high-tech companies are piling into China, lured by the nation's 1.3 billion consumers and rapid economic growth. Along the way, many have struck or are considering similar censorship arrangements with the government.

``All Internet companies that deal with China voluntarily sign agreements that their Web manager will censor any content on their Web site,'' said Anne-Marie Brady, a China media expert at New Zealand's University of Canterbury. ``China is so hot, firms just can't keep away. In China, money talks.''

Zittrain's April study on censorship in China declared that Chinese laws are so vague that many companies feel obligated to act conservatively, fearing that they may be barred from doing business or that their employees may be arrested. Internet content providers, a category that evidently includes MSN China and Yahoo, are required by law to monitor postings and remove any illegal or inappropriate content.

Yahoo's senior international counsel, Mary Wirth, said Yahoo did only what the law required when it dropped links to pages with objectionable material. ``We do not go at all beyond what Chinese law requires,'' she said.

Although bloggers from Singapore to Britain have condemned Microsoft's decision to restrict words in its blogs, the issue has received far less attention inside China. A search of Chinese-language chat sites last week found few entries on the subject, probably because discussions were shut down by the nation's estimated 30,000 cyber police or because filtering is so widespread that Chinese found nothing unusual in Microsoft's decision.

Television network employee Yang Jie, 29, said he enjoys the idea of having virtual territory where he can plant whatever he wants, ``so long as it doesn't touch on subjects overly sensitive to the ruling Communist Party.''

Yang isn't particularly bothered by China's filtering policy, he said, except occasionally when he wants to write on issues like the Nanjing Massacre in 1937 and is forced to use code words or indirect references.

When it comes to Microsoft, however, Yang believes the software giant is doing the right thing.

``It's natural for companies to adjust their practices in foreign countries to get profits,'' he said.

``As they say in politics, there are no permanent friends, just permanent interests.''