Microsoft officials already announced last October that they had agreed to alter the new software for the EU market.

"We are committed to adhering to local law in every region of the world," Microsoft CEO Steve Ballmer said at the time.

The company's general counsel, Brad Smith, added that Microsoft had agreed to make a number of changes to Windows Vista after a "constructive dialogue" with the European Commission.

"Based on this guidance, we have made changes to ensure that we're in compliance with our competition law obligations," Smith said in a statement.

According to Microsoft, the changes affect Vista's security, search and fixed documents formats functions. European customers will also be able to buy a Vista version that does not include the Microsoft Media Player to comply with a 2004 EU antitrust ruling.

Ignoring the EU?

Prior to altering the system, Microsoft had risked a new showdown with EU regulators nearly three years after a landmark antitrust ruling against the US software giant, officials said. According to news reports, Microsoft competitors had complained that the US giant was ignoring that ruling with its new system.

"With Vista, Microsoft has clearly chosen to ignore the fundamental principles of the commission's March 2004 decision," Simon Awde, the chairman of the ECIS trade association that opposes Microsoft in its antitrust troubles, said, according to AFP news service.

ECIS, which includes such tech giants as Oracle, IBM and Nokia, filed a complaint with EU regulators in February 2006 targeting Vista and Office and updated their action with details on Vista last month.

Extending market dominance?

ECIS members warn that, as with earlier Windows versions, Vista is designed in a way that makes it difficult for them to build software that is interoperable with it, hampering competition in effect.

"Vista is the first step in Microsoft's strategy to extend its market dominance to the Internet," Awde said.

Microsoft has long clashed with the commission over the crushing market power of its existing Windows operating system and was fined a record 497 million euros ($642 million).

In addition to fining Microsoft, the EU ordered the company to sell a version of its Windows operating system without Media Player software and to divulge the software protocols underpinning Windows for makers of rival products.

Microsoft appeals

Microsoft challenged the 2004 ruling in the EU's second-highest court in April and the judges are expected to hand down a decision in the first half of the year.

Frustrated with Microsoft's defiance of some of its demands, the commission in July slapped daily fines adding up to 280.5 million euros over the six-month period of the penalty for failing to fully respect the 2004 antitrust ruling.

Microsoft is appealing against the charges.