23 March 2004 Microsoft is to be fined a record $615 million by European antitrust regulators for allegedly abusing its monopoly of operating systems.

Mario Monti, the European Competition Commissioner, has received the backing of European Union (EU) member states to impose the fine, which is expected to be formally approved by EU commissioners tomorrow (24 March).

Microsoft will also be ordered to offer a version of its operating system in Europe that does not contain Media Player, the video application that is bundled with Windows. In addition, the software company will be told it must provide information to enable rival companies to make their server software compatible with Microsoft products.

Microsoft, which has consistently denied any wrongdoing, is likely to appeal the ruling. That could lead to yet another lengthy legal battle – a prospect that might encourage EC chiefs to reach a settlement with the software giant, say legal experts.

The $615 million fine is much lower than the maximum available to the EC – 10% of a company’s turnover, or $3.4 billion in Microsoft’s case. But Microsoft believes the maximum fine should have been set much lower since only about 30% of its sales are made in Europe.

Horacio Gutierrez, Microsoft’s chief counsel in Europe, says the fine is double what he believes the EC can legally impose.

Moreover, he believes that it is “unprecedented and inappropriate” for Europe-based regulators to fine a US company, particularly in light of the US Department of Justice’s settlement with the company.

Meanwhile, Microsoft faces more difficulties later this week when a delegation of UK customers will meet the heads of Microsoft UK to discuss Software Assurance, the software company’s controversial subscription-based licensing and maintenance programme.

The Corporate IT Forum, which represents the IT functions of some of the UK’s biggest companies, will confront Microsoft at a private meeting on 26 March, according to the Independent newspaper.

The IT user body says that Software Assurance has cost its members an extra £880 million since it was introduced in 2002. One member told the newspaper that such a sum was “far too expensive for the business benefits we would gain through upgrades.”

Software Assurance guarantees users immediate access to upgrades of Microsoft products such as Office and Windows. But even Microsoft has admitted that adoption rates have been disappointing.