Microsoft said this week that it was working with European antitrust officials on their investigation of the software giant.

Speaking to reporters on Monday, Microsoft chief executive officer Steve Ballmer said that the Redmond, Washington-based software firm was working "constructively" with EU antitrust officials, who are attempting to determine if the company has abused its powerful position in the computer operating system market. The investigation has been under way for about three years and a decision is expected in the next three months.

The comments come just days after Philip Lowe, a senior civil servant in the European Commission's competition division, said that Microsoft had so far failed to offer the European Commission grounds for a settlement in the antitrust dispute. "We still have outstanding concerns," Lowe said, adding that the Commission would have come to a "negative decision" if it weren't for the ongoing dialogue between the two parties.

The heart of the disagreement revolves around whether Microsoft has abused its dominant position in the computer operating system market by making certain versions of its Windows software less compatible with non-Microsoft server software. The Commission has also accused the company of suppressing competition in the market for video- and audio-playing software by bundling its Media Player software with Windows.

Unless the EC and Microsoft can reach a settlement, a solution will be imposed on the company by the Commission. The EC also has the power to impose a fine on Microsoft of up to USD3 billion, or about 10 percent of the firm's annual sales.

In February of this year, an organisation that represents some of the world's biggest tech firms -- including Nokia, Eastman Kodak, Fujitsu, NTT, Sun Microsystems, AOL Time Warner and Oracle -- urged the EU to investigate the dominance of Microsoft's Windows XP software. The current action against Microsoft does not cover operating systems newer than Windows 2000, but the Computer and Communications Industry Association (CCIA) said that the company's alleged market abuses in the last three years also deserve investigation.

In January 2003, Microsoft agreed to make substantial changes to its .Net Passport system in order to avoid a possible fine for breaking EU data protection laws. © ENN