17 February 2004 A central plank of Microsoft’s proposed antitrust settlement with European regulators has been rejected by Brussels, according to reports.

It is understood that the software giant suggested during its ongoing talks with the European Commission (EC) that rival companies’ products be added to CDs that accompany sales of personal computers.

The proposal is seemingly designed to take the sting out of Microsoft’s long-running practice of bundling new features, such as web browsers and media players, with the Windows operating system that typically comes pre-installed on PCs.

But rivals argued that the proposal does not go far enough, believing that most users would simply fail to upload extra software from a CD. EC officials are believed to have sided with their argument, according to a report in today’s Financial Times.

If true, the news represents a severe setback to Microsoft’s bid to prevent Brussels imposing draconian punishments on it. The EC is expected to reach its final decision by May 2004.

The case is focusing on whether it was uncompetitive of Microsoft to bundle its Windows Media Player product with the Windows operating system.

Microsoft claims that consumers will suffer if Media Player is unbundled from the operating system. It also believes that such a penalty would be disproportionate to the alleged offence.