European regulators announced on Thursday that settlement talks with Microsoft had collapsed, leaving it virtually certain that an antitrust ruling would be issued against the company.
The end of the talks came after three days of face-to-face meetings between Microsoft’s chief executive, Steven A. Ballmer, and the European Union’s antitrust chief, Mario Monti. A formal ruling is not expected until Wednesday, but Mr. Monti unexpectedly appeared at the European Commission’s noon briefing to announce that “a settlement on the Microsoft case has not been possible.”
The five-year-old European case accusing Microsoft of abusing its dominance in operating software — in particular, its bundling of Media Player, the video- and music-playing software, into Windows — has been the last major legal challenge dogging the company since the landmark settlement of the Justice Department’s antitrust lawsuit in 2001.
The case also contended that Microsoft unfairly withheld technical information from competitors, making it difficult for them to create software for business servers that would work well with Windows.
A ruling against the company, if upheld in court, could mean a fine of as much as $3 billion. More important, it could force the company to make fundamental changes in the way that it sells software in the European Union, the world’s largest trading bloc, where Microsoft now generates about a third of its $11 billion in annual global sales from Windows.
More generally, Microsoft would face new obstacles in its efforts to expand its business to consumer video and audio services and to incorporate additional features, like searching the Web, directly into its operating systems.
The ruling could also become a reference point for future antitrust litigation against the company.