The European Union seems set to force Microsoft to offer two versions of Windows to PC makers – with one version stripped of Windows Media multimedia software in a blow to the company's plans to establish its proprietary standard.

The EU wants to give other multimedia software vendors, including Apple and RealNetworks, a better chance to gain market traction.

In an echo of claims about Internet Explorer during the US Department of Justice anti-trust trial against the monopolistic company, Microsoft claims removing Media Player would compromise other parts of its OS. Microsoft reckons its full-fledged Media Player is needed for things like screensavers and the "ping" a computer makes when email arrives.

However, the EU has already made a preliminary finding that Microsoft violated EU competition law by including its multimedia software with Windows, and also denying competitors in the server industry sufficient access to code to allow them to make their products work with Windows.

A report by Associated Press (AP) says: "Taking out Media Player could undermine Microsoft's long-term strategy of keeping Windows on top by incorporating new functions, which it argues benefits consumers."

European Commission spokeswoman Amelia Torres told AP: "The draft decision contains clear remedies to the identified illegal conduct, remedies which will restore a competitive marketplace for consumers in Europe." She refused to comment on specific remedies being sought.

Microsoft said it is "working actively with the European Commission toward an amicable settlement of this case."

Sources told AP that a draft decision sent to national regulators for review last month recommended that Microsoft offer computer manufacturers two versions of Windows: one with Media Player and one without.

Microsoft has suggested a solution where it includes rival players on a CD-ROM shipped with Windows that consumers could install if they liked. This compromise was rejected by the Commission for placing "too much burden" on consumers.

In a game of legal hardball, Microsoft has said it will appeal against whatever reparations Europe may demand from the company.