Microsoft faces a heavy fine from the European Union (EU) for anti-competitive practices involving its Windows Media Player software, after the EU states gave their backing yesterday.

Although the fine, due to be revealed tomorrow, is likely to be a record €497m (£331m), it is a drop in the ocean for Microsoft, at just over one per cent of its cash on hand.

The fine is also a fraction of the EU's permitted maximum of 10 per cent of annual turnover, which for Microsoft would have been a whopping £1.8bn.

But Microsoft still plans to appeal.

In a statement, the company's associate general counsel for Europe, Horacio Gutierrez, said: "We believe it's unprecedented and inappropriate for the [European] Commission to impose a fine on US operations when those operations are already regulated by the US government, and the conduct at issue has been permitted by both the Department of Justice and the US courts."

The EU is also expected to approve two further penalties, requiring Microsoft to make a version of its operating system available without Windows Media Player, and to license information to rivals at a "reasonable fee" so they can make their software more compatible with the Windows desktop.

But Gary Barnett, principle consultant at analyst Ovum, told vnunet.com that he doubted whether this action would have any lasting impact.

"Separating the Windows Media Player from Windows isn't going to do a great deal. It is as much an irritant to the user as it is to Microsoft," he said.

"What they need to go for is the media format itself. There are open formats - MP3 is one. Some Windows Media files won't play except on Windows Media Player."