Bill Gates' titan, whose products power 90 percent of personal computers, will suffer its first serious regulatory setback when the European Union announces the findings of a five-year anti-trust investigation on Wednesday.

The Seattle-based company, denying that it abuses its overwhelming dominance to illegally crush competitors, has already vowed to appeal the verdict to the European Court of Justice.

Following the failure of last-ditch settlement talks last week, EU Competition Commissioner Mario Monti will almost certainly announce hefty fines against Microsoft.

Monti, whose term as competition commissioner ends in October, has stuck to his guns in the face of claims by Microsoft that his verdict will do nothing for competition and everything to block innovation.

"It is essential to have a clear principle for the future conduct of a company which has such a strong dominant position in the market," he said last Thursday.

The cash-rich company can well afford the fines, which under EU law could reach as high as three billion euros but are more likely to be in the hundreds of millions of euros.

The exact level of the financial penalty will be decided in talks Monday between Monti and competition experts from EU member states.

However, Microsoft will find the other part of its widely trailed punishment much harder to stomach.

Monti is expected to order the company to detach its multimedia program Media Player from its all-conquering Windows operating system, to give rival products a more level playing field.

He will also direct Gates' firm to share programming code to enable rivals to make software that can work with its low-end servers. These enable computers to hook up to a network and are a key battleground in the IT industry.

Media Player handles sound and visual data, such as radio and TV streams and MP3 files -- a function that has become all the more important for PC users in the multimedia age.

Rival companies such as RealNetworks and Apple complain that their media players cannot compete fairly because of Microsoft's practise of attaching ("bundling") its player to Windows.

But the bundling strategy has been at the heart of Microsoft's supremely successful business model of offering consumers an all-in-one suite of applications.

In the United States, Microsoft was accused of similarly unfair practices notably in bundling its Internet browser program with Windows.

But after a four-year anti-trust probe, the US Justice Department reached a hotly contested deal with Microsoft in 2001 that forced the firm to share some technical data with rivals but stopped short of fines.

The agreement was upheld by a US judge a year later, leaving competitors to transfer their hopes for redress to the European Commission's own investigation.

A coalition of anti-Microsoft companies, the Computer and Communications Industry Association (CCIA), applauds the prospect of a European comeuppance for its bete noir.

"It will be a first step to restoring consumer choice and innovation in multiple markets subject to the stranglehold of a monopolist," CCIA chief executive Ed Black said last week.

Wednesday's verdict will not be the end of Microsoft's regulatory troubles. The CCIA has lodged a complaint with the European Commission demanding wholesale changes to the firm's flagship operating system, Windows XP.

SPACE.WIRE