The EU's competition watchdog slapped Microsoft last Wednesday with a record €497.2 million ($604 million) fine for abusing its dominant position in the European market.

The European Commission said that Microsoft must release information that may be protected by intellectual property laws to its competitors.

Bringing the five-year investigation to a close, the Commission found that the US software giant had violated EU competition rules by deliberately restricting the interoperability of its Windows software with competing computer applications.

Microsoft's operating systems run on more than 95% of the world's personal computers, a situation which the Commission described as a "near monopoly".

"This illegal conduct has enabled Microsoft to acquire a dominant position in the market for work group server operating systems," said the Commission.

According to the Commission, one result of Microsoft's conduct is a decline in competition in the digital media player market.

In addition to the fine – the highest imposed by the EU – the Commission gave Microsoft three months to present PC manufacturers with a stripped-down version of its Windows operating system that excludes the Windows Media Player.

It also ordered the company to disclose within 120 days complete and accurate interface documentation to its competitors allowing them to develop competing products. The disclosures would need to be updated with every new Microsoft release.

If any such information was protected by IP rights, the Commission said that Microsoft "would be entitled to reasonable remuneration". But it gave no more details about who will decide what "reasonable remuneration" actually means and how much it will be.

"In effect, it will most likely mean compulsory licensing for Microsoft," said Pat Treacy, head of competition law at Bristows. "For IP owners, this will be what they will focus on most closely."

Treacy said that imposing a compulsory licence is "pretty unusual" for the Commission, and so far it is only the second such final decision, after the Magill TV licence case.

According to the Commission, the disclosures, which will not include the Windows source code, are necessary because the "illegal behaviour is still going on" and disclosure is the only solution to restore the conditions of fair competition.

Microsoft senior vice-president and general counsel Brad Smith said the company will appeal the ruling to the European Court of First Instance, and will also ask for a stay in the Commission's imposed restrictions.

"We have acted responsibly while seeking to build the best products we can to meet the needs of our customers," said Smith. "We believe that the Commission's decision would actually reduce consumer choice and hurt European software developers. We want to resolve these issues as quickly as possible, and we look forward to the possibility of continuing these discussions as this case moves forward."

But a final verdict on the case is unlikely for another five to six years, according to Treacy. Following Microsoft's appeal, the Court of First Instance could take up to two years to give its judgement, which would most likely be appealed by either party to the European Court of Justice. A judgment here could take another two years.