Software giant Microsoft must pay a fine of 497m euros ($613m; £331m) for abusing its dominant market position, the European Commission has ordered.
Competition Commissioner Mario Monti also insisted Microsoft must reveal secrets of its Windows software, which sits on 90% of the world’s PCs.
The European Commission approved Microsoft’s punishment on Wednesday.
Microsoft has already said it will appeal, kicking off a legal battle that could last years.
Mr Monti said he was confident “that we have produced here a decision that will stand before any appeal”.
Microsoft has a cash pile of more than $50bn, so even a fine on this scale – a record for the EU in an antitrust case – is unlikely to hurt it commercially.
In fact, the company’s shares climbed 0.6% to $24.29 in New York during early trading.
Industry experts say that the non-financial penalties are likely to hurt Microsoft more by opening it to further challenges and altering the regulatory environment it operates in.
Mr Monti has ordered Microsoft to reveal details of its Windows software codes within 120 days, to make it easier for rivals to design compatible products.
Microsoft must offer a stripped-down version of its Windows operating system minus the firm’s MediaPlayer audiovisual software within 90 days.
Microsoft will still be allowed to sell Windows with Media Player bundled in.
Rivals including Realnetworks welcomed the move, saying that at long last the playing field had been levelled.
The five-year-old EU case was launched after complaints from rival makers of audiovisual software that Microsoft was protecting its own media player and squeezing out others.
Mr Monti said Brussels’ decision did not break new legal ground in either Europe or the US, nor did it expropriate Microsoft’s intellectual property.
Microsoft claims that it should not be fined at all because it did not know its behaviour would breach EU law.