Rivals of Bill Gates' Seattle-based titan appeared upbeat as the talks drew to a close, although talk of a possible compromise solution also remained in the air.

"We are very, very pleased," said Ed Black, head of the Computer and Communications Industry Association, which includes Oracle Corporation, Nokia, Sun Microsystems and others.

"The proceedings are extremely fair to Microsoft, but in spite of that we feel very confident about the outcome," he told AFP.

During the closed-door talks Microsoft pledged to "work things out" with the EU's competition commissioner Mario Monti in what it called constructive talks.

But its chief lawyer Brad Smith gave no concrete signs of what solutions could be found.

And its rivals said Microsoft is struggling to convince the Brussels commission.

"Microsoft's arguments sounded superficially good but we punctured their balloon very thoroughly. All the 30 parties have in their own way have devastated their arguments," said one source.

The source lashed out at Microsoft's hint that it would seek a compromise solution.

"We believe it's simply a smokescreen to hide the facts that they are loosing so badly they are trying to make it look better," he said.

Microsoft secured a settlement with the US Justice Department in November 2001 that was condemned by other firms as inadequate. Appeals against the settlement are drawing to a close.

But in Europe Microsoft could face upwards of three billion dollarsbillion euros) in fines and be forced to make substantial changes to how it markets its all-conquering Windows operating system if found guilty of using its dominance to crush rivals.

The software titan is accused of abusing the dominance of Windows -- which is installed in 90 percent of all personal computers (PCs) -- to fend off competing applications.

The EU hearings revolve around charges that Microsoft has tried to squelch rival products to its Windows Media Player, such as RealPlayer and Apple QuickTime.

And it is accused of trying to squeeze out other firms in the market for "low-end servers" -- computers that provide e-mail and other services to multiple users.

The online media market is seen as one of the crucial growth areas that will shape the computer industry for years to come as more and more users venture into cyberspace to listen to music or watch films.

Control of the servers that provide such services would give Microsoft extraordinary additional clout to dictate terms to PC manufacturers.

The European Commission has said Microsoft must come up with "very convincing" arguments to head off an adverse judgement and the threat of fines.

The Commission has already detailed preliminary remedies that would require Microsoft to strip Media Player from Windows and reveal product secrets for its servers to rivals.

Fines of up to 10 percent of the company's global revenues could also be in the offing, equivalent to 3.2 billion dollars for Microsoft.

However, past EU fines against companies accused of monopolistic practices have ranged from 0.1 percent to just over 1.0 percent of the firm's revenues.

A final decision by the Commission in the Microsoft case is unlikely before early 2004, sources say.

SPACE.WIRE