Microsoft is facing an “uphill struggle” in defending itself against charges of anti-competitive practice. It has been making last-ditch attempts to persuade European competition regulators that it isn't breaking the European Union's antitrust laws in a three-day closed-door session in Brussels.

The European Commission claims Microsoft continues to abuse the dominance of Windows, even after the company settled with regulators in a similar case last year in the US. And Microsoft's top lawyer, Brad Smith, acknowledged the size of the challenge he faced, commenting: "Hope springs eternal."

The commission believes Microsoft is using Windows' near monopoly to muscle out competitors in the markets for audio and video playing software and for server software designed for small PC networks.

The EC said in August that by bundling Media Player into its Windows products, Microsoft had put rival audio/video players,such as RealNetworks’ Real One Player and Apple's QuickTime media players at an unfair disadvantage.

And by withholding crucial information about Windows code, the Commission said Microsoft has prevented rival makers' low-end server software being interoperable with Windows.

According to a lawyer present at the hearing, Microsoft’s defence is that Media Player is a natural part of the Windows operating system and that it achieves efficiencies by bundling it into Windows."

When it came to servers, Microsoft tried to broaden the definition of the software market to include all servers, rather than the small server segment it dominates. If this argument holds up, it will be harder for the Commission to prove Microsoft has expanded its dominance of PCs into the market for server software.

Research company IDC says Microsoft held a 55 percent market share of servers costing less than US$25,000 each in the second quarter of this year in the European Union. By contrast, its products account for 24 percent share of the server market as a whole.

Sources close to the commission say the EU regulator has sent out letters requesting information about allegations that Microsoft is continuing to abuse its dominance with Windows XP, a version of the operating system not covered by the ongoing antitrust case.

Earlier this year, the CCIA (Computer and Communications Industry Association) lodged a formal complaint with the Commission that Microsoft is using XP to expand its dominance into other markets, including instant messaging and mobile devices such as mobile phones.

Spokeswoman Amelia Torres said "If we did send out such letters, it would be a normal procedure”.