Report: Microsoft Squares Off With European Regulators

Key hearings are set to begin in the long-running antitrust case over media-player software.
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Microsoft

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is reportedly facing fines of up to 10% of its revenue, or $3.2 billion, as European Union regulators begin hearings into whether the company violated antitrust regulations by including music and video software in its Windows operating system.

The company and European regulators are set to begin three days of hearings, according to a report in

The Wall Street Journal

Wednesday. The three-year-old case involves different issues than the ones Microsoft settled with U.S. regulators last year.

Microsoft has been trying to get the E.U. to drop the case, which, if successful, would force the company to remove its media-player software from the Windows operating system. The U.S. antitrust case focused on Microsoft's inclusion of its Web browser in Windows.

Last year Microsoft was able to settle its U.S. antitrust suit by agreeing to provisions that would allow rival software makers such as

RealNetworks

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and

Apple Computer

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easier access to Windows, but without completely removing Microsoft's competing products. The Europeans apparently want Microsoft to completely remove its media player from Windows. Microsoft claims, as it also did in the U.S. case, that these applications are a part of the operating system and are very difficult or impossible to remove.

The European Union's competition, or antitrust, commission has a different charter than its U.S. counterparts. E.U. regulations focus on maintaining a level playing field for competitors in the marketplace while U.S. antitrust law is more focused on how potentially monopolistic practices affect consumers.

Though Microsoft faces fines of up to 10% of revenue, European regulators have never imposed such draconian penalties. They will rule on the case and impose any fine early next year.

Microsoft's stock was unchanged in premarket trading after closing Tuesday at $25.80. The shares are off about 4% for the year. The company recently decided not to raise its dividend despite the fact that it has more than $50 billion in cash, citing this and other outstanding litigation.