European Union states on Monday backed a proposal to fine Microsoft a record €497 million for abusing its dominance of PC operating systems.
If the full European Commission backs the fine as expected on Wednesday it would exceed the €462 million penalty imposed on Hoffman-La Roche in 2001 for being ringleader of a vitamin cartel.
Microsoft associate general counsel for Europe Mr Horacio Gutierrez said in a statement the fine was unjustified.
"We believe it's unprecedented and inappropriate for the Commission to impose a fine on a company's 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," he said.
Microsoft reiterated plans to appeal.
As well as the fine, Microsoft is to be ordered to offer a version of its Windows operating system without Windows Media Player and to encourage computer makers to provide other audiovisual software.
It must also license information to make the servers of rivals more compatible with Windows desktop machines.
The fine amounts to slightly more than one per cent of Microsoft's roughly $53 billion cash on hand and did not impress analysts and critics.
"This is a traffic ticket for Microsoft," said Mr Thomas Vinje of Clifford Chance, who represents Microsoft critics.
Mr Neil Macehiter, an analyst with London-based technology research firm Ovum, said even a $3 billion fine would have been "an irritant to Microsoft but certainly wouldn't break the bank."
A source close to Microsoft argued that the size of the fine was unprecedented and inappropriate because it took into account operations in the United States instead of just in Europe.