Microsoft is working to resolve its problems in Europe, company chairman Bill Gates alleged last night.

He said he is working to resolve issues related to the company's compliance with antitrust remedies. This follows earlier reports claiming the European Commission is frustrated with the US corporate giant.

"We are working to bring these issues to a positive resolution," Gates said when asked about the matter during a press conference at Microsoft's Government Leaders Forum in Prague.

As part of the Commission's measures to rectify benefits Microsoft has derived from its illegal anti-trust activity, Europe last year ordered the company to provide a version of Windows XP without Windows Media Player installed.

This is because European lawmakers believe Microsoft leveraged its dominance in the desktop software market to gain advantage against competing media player providers. The Commission also ordered the company to publish the APIs (application programming interfaces) for its workgroup server software and levied a significant €497 million against the company.

Microsoft has already made the stripped down version of Windows XP available to original equipment manufacturers (OEMs), but the operating system's suggested name, "Windows XP Reduced Media Edition," reportedly raised the Commission's ire. It was believed to be unappealing to consumers, especially given that both versions cost the same.

The Commission also expressed concern about dialogue boxes that appear with the Media Player-free version, warning users that they won't be able to access certain Web sites or view some types of content. According to news reports, the Commission was mulling additional fines of up to 5 per cent of Microsoft's daily gross revenue if the company made the Media Player-free version unattractive to customers.

Gates met with Commission leaders in Brussels earlier this week and discussed the matter.

The company is still working on an acceptable name for the new operating system and to resolve concern over the dialog boxes, according to Microsoft CEO of Europe, the Middle East and Africa Jean-Philippe Courtois.

If the operating systems already sent to OEMs require changes, they can be updated, Courtois said.

Even while Microsoft continues to work through potentially thorny issues with the Commission, it is collaborating with the body in other areas, such as fighting spam, Gates said.