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On the whole, competition authorities - in all geographies - have an undistinguished record in dealing with IT companies they think have become too powerful.

A few exceptions aside, regulators are usually outmanoeuvred, outgunned or simply accede to the pressures of the companies they are trying to control. And even when the regulatory body 'wins', it usually imposes only the faintest of slaps on the wrist, perhaps a small product modification or extracting a promise of more co-operative, open behaviour.

This apparent weakness is not necessarily a bad thing. It has frequently been argued - and not just by the defendants - that market dynamics alone will usually be enough to end all but the most structurally tight monopolies. IBM's loss of control of the IT industry in the 1980s is a clear example of this: the various US and European anti-trust cases against the company played little part in its downfall; hubris, and a certain William Gates III, played far greater roles.

Even so, recent events suggest it can pay for governments to take a hard line and that the scepticism of analysts, myself included, is not always justified.

Take the ongoing European Commission case against Microsoft, in which the company has been found guilty of anti-competitive practices, particularly relating to the bundling of its Media Player software with the Windows operating system. For perhaps the first time in its history, Microsoft has been losing the legal battle. It has been fined €497 million by the Commission, it has lost an appeal to have sanctions suspended (until a full appeal is heard) and it has had to agree to make product modifications.

For the first time ever, Microsoft must now ship two different versions of Windows in Europe, one bundling in its Media Player, the other without. This gives computer makers the opportunity to take the cheaper, reduced operating system, and to use software from Microsoft rivals RealNetworks, Apple and dozens of others. Microsoft must also disclose some Windows server interface information, and it has even backed down on a threat to label the new cut-down version "Reduced Windows".

There are those who argue that these concessions are small, that these impositions are ultimately of little significance, and that Microsoft is continuing to behave aggressively in the marketplace. In support of this, some have pointed to Microsoft's announced intention to offer accounting software as an extension to its Office suite soon. That decision already has financial software companies, including UK leader Sage, reportedly murmuring of a further possible complaint to the European Union (EU).

The EU itself is aware of the possibility that the rulings will not make a difference, and is already sounding out Microsoft competitors and customers about the company's current behaviour and control of the market.

It now seems that some kind of barrier has been breached that might lead to a more open software market. In February, Microsoft said it will offer a new version of its Internet Explorer browser software this year - ahead of a new version of its full Windows operating system. This goes directly against the company's repeated courtroom arguments that the browser and the operating system were integrally linked.

So, with the 'necessary' link between browser and operating system now broken, what of other functions? 'Service-oriented', mix-and-match architectures will increasingly dominate in software design - so why not allow customers to mix and match the components they buy to plug in with Windows? All in all, the Commission may feel it has done a good job and one that US regulators failed to do on several occasions. And it may also feel that, once Microsoft gets used to the idea of more openness, the company's strategists and shareholders may actually like it.

Certainly, it can pay to take a hard line - as the telecoms market regulators in the US did in the 1970s. They took the bold decision to break up the telecoms giant AT&T into a national long-distance carrier and seven regional Bell operating companies. In doing so, the regulators created intense competition, driving down prices and opening up new markets. Now, one of those 'Baby Bells', SBC (formerly Southern Bell), has thrived to the point where it can now buy back its parent AT&T for some $16 billion. And another, Verizon, formerly Bell Atlantic, has bid $6.75 billion for MCI, once AT&T's most bitter rival.

This is just the kind of result the regulators will have been looking for - helping the creation of strong but not dominating companies vying for a share of increasingly unregulated markets. Anti-trust legislators and lawyers are great students of history. What will they make of these lessons?