Microsoft, the world's largest software maker, faces a European Commission fine for charges that it abused its dominant market position and may be ordered to reveal key secrets to competitors and change the way it distributes its music and video software.

The Commission, the European Union's executive body, said yesterday that it felt it had a strong case in its four-year antitrust probe against Microsoft and the amount of the fine would be linked to the severity and duration of the company's perceived offence.

"At this stage, we have so much evidence and we are in possession of such substantive a file that we believe any decision we take will withstand scrutiny of the European court," Commission spokesman Mr Tilman Lueder told a briefing.

Whatever the size of the fine imposed by the Commission, Microsoft can dip into its cash holding of $49 billion (€43 billion).

In New York, Microsoft shares were marginally weaker in morning trade, down 0.6 per cent at $25.51, outperforming the Nasdaq Composite index, which was down 1.3 per cent.

A spokeswoman for Microsoft said the company was examining the Commission's preliminary finding, which she described as unfortunate because it would lengthen the duration of the case, which began in 1999.

"We take this investigation very seriously and will work hard to focus our efforts, responding to concerns and bringing this to a positive conclusion," said Ms Tiffany Steckler in Paris.

She said Microsoft had dealt with some of concerns raised by the Commission through remedies it agreed to in its US case.

But the Commission said: "The Commission's preliminary conclusion is that Microsoft's abuses are still ongoing."

It accused Microsoft of leveraging its dominant position in the marke in PC media players and low-end servers which manage everything from websites to email systems.