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There was a posting here about this in December, but no responses. Some additional info is linked to below.
Last Review: February 28, 2006
...Microsoft is releasing a software update to Microsoft Internet Explorer 6 for Microsoft Windows XP Service Pack 2 and for Microsoft Windows Server 2003 Service Pack 1. This update changes the way in which Internet Explorer handles some Web pages that use ActiveX controls.
Updated December 2, 2005
After a forthcoming update, Microsoft Internet Explorer users will not be able to directly interact with Microsoft ActiveX controls...
Microsoft on Tuesday made broadly available an Internet Explorer update related to a high-profile patent spat with a start-up backed by the University of California.
The update changes how the browser handles Web programs known as ActiveX controls.
Microsoft is moving full steam ahead with a plan to permanently modify [eweek.com] the way Internet Explorer renders multimedia content on Web pages, but in what amounts to an admission that the changes could be disruptive, the software maker plans to give Web developers an extra 60 days to continue making preparations.
The IE update, which results from a multimillion-dollar patent spat with Eolas Technologies, changes the way the browser handles ActiveX controls and could have a significant impact on how online advertising and streaming media content is delivered over the Internet.
Eolas: Changing IE User Experience a Shame [eweek.com]
Eolas Technologies says the decision by Microsoft to modify its Internet Explorer browser at the expense of a seamless user experience is a "disappointment" and a "shame."
Reacting to news that the next cumulative IE security update will require an extra mouse-click to interact with certain embedded multimedia content, Eolas Chief Operating Officer Mark Swords called on the software maker to purchase a patent license instead of worsening the browsing experience.
Personally, I hope this sparks a large exodus to alternative browsers, like Firefox.
The Microsoft update is automatic - so yes, if you have your computer set to "automatic updates", you *will* be affected by this. (you *should* be affected already, as it happened April 11!) It's not just Flash they're targeting, but Active X controls ("embed" and "object" tags) - so Flash will be affected, but also QuickTime, Adobe, RealPlayer, Sun Java runtime and other controls like that.
Hope this help you all out :)