By: Jeff Johnston

Talks between Steve Ballmer, CEO of the software giant Microsoft, EU Competition Commissioner, Mario Monti, collapsed on Thursday. Monti stated that “a settlement on the Microsoft case has not been possible.” He stated that while Microsoft had been cooperative they were “unable to agree on commitments for future conduct.” Ballmer still maintains hope that Microsoft and the EU can work out their differences.

Microsoft would have had to agree to some significant changes in the manner they conduct business in Europe in order to prevent the upcoming battle. Since they could not agree to this they are now faced with the possibility of hefty fines and a formal legal ruling. The ruling is expected to say that Microsoft abused their market position to give them an advantage over other media player software developers.

If the EU is successful Microsoft could be forced to open up their highly guarded secret Windows source code and providing a version of Windows without the offending media player. Ballmer’s proposed settlement agreement included allowing competing media player developers access to technical information regarding Windows source code to allow for greater interoperability, and including competitor's media players in the install of Windows. They would not, however, agree to two separate versions of Windows, which the EU claims could have made the talks successful.

Microsoft lost an antitrust suit in the US in 2000 and was originally ordered to split into two different companies, however in appeals the judgment was much less harsh. Microsoft was ordered to release certain key details about their software interfaces and had restrictions on the types of contracts they could enter into.

It has been speculated that this suit against Microsoft is the EU’s attempt to step up the world’s view of them by becoming the first government to successfully hit Microsoft hard.