Sun Microsystems and RealNetworks have presented their arguments to EU regulators that Microsoft has acted monopolistically in Europe.

Speaking after the meeting, Microsoft said that the process had been "a positive step towards a meaningful solution".

It added that it wants to "narrow the differences" with its opponents, after discussing the issues raised in the case with European regulators and its rivals in the computer industry.

Neither Sun nor RealNetworks commented on the details of their presentations, but RealNetworks is believed to have warned regulators that if Microsoft's business practices go unchecked, it will soon have a stranglehold over all sound and video content transmitted through computers and handheld devices such as portable phones.

The European Commission said in August that by embedding Media Player into Windows, Microsoft is abusing the dominant position of its ubiquitous operating system in order to corner the media-playing software market.

Microsoft argues that bundling Media Player into Windows achieves efficiencies, which eventually benefit the consumer.

It doesn't want to change this practice, partly because its strategy for many new applications also relies on them belonging inside Windows, and it fears that by agreeing to unbundle Media Player it will be setting a dangerous precedent for the future.

In related news, Microsoft intends launching its own music download site through its MSN Web portal next year, the company has confirmed. This service will employ Microsoft's proprietary Media Player software, which it does currently bundle with Windows; it is also likely to take advantage of Peter Gabriel's preparatory work done to popularize the Windows Media format among European record labels.

The service will compete with similar services that use competing multimedia standards, such as Apple's QuickTime-based iTunes Music Store and Real Network's Real Player-powered Rhapsody service.

Computer-giant Sun is supporting the Commission in its efforts to force Microsoft to reveal enough Windows computer code to allow rivals to devise server software that works as well with Windows as does Microsoft's own server software.

After the three-day hearing, the European Commission will produce a draft ruling, possibly as soon as next month. The draft will contain the changes it wants Microsoft to make to its business model and the size of fine it intends to impose on the company for having broken Union antitrust rules.

It will then present the draft to regulators from the 15 member states of the Union, who were also present at this week's hearing.

If national regulators support the proposed ruling, the Commission will then make it final. Mario Monti, the commissioner for competition issues, would present it to his fellow commissioners, probably in the first two months of next year, and they would vote on whether or not to go ahead with the ruling.

Microsoft is expected to try to reach a settlement during this process. Its senior counsel, Brad Smith, said on Thursday that he wants to "work things out" with the Commission. But it remains unclear whether Microsoft will be willing to offer what the Commission seeks.