Microsoft is to license parts of its Windows source code to competitors, it revealed on January 25.

The software company is taking the initiative in response to the European Commission's demands that it open up its source code for certain technologies to address competition concerns.

"Today we are putting our most valuable intellectual property on the table so we can put technical compliance issues to rest and move forward with a serious discussion about the substance of this case," said Brad Smith, Microsoft's senior vice-president and general counsel.

The Commission fined Microsoft €497 million in March 2004, after finding the company guilty of abusing its dominant position.

In December last year, Microsoft offered 12,000 pages of documentation and up to 500 hours of free technical support to software developers who take a licence.

On December 22 the Commission published a statement of objections saying that this response was inadequate.

The company believes the licensing of its source code, combined with the action announced in December, goes beyond the requirements laid down by the Commission. "We wish to dispel any notion that Microsoft's technical documents are insufficient," said Smith.

But European Competition Commissioner Neelie Kroes, speaking from the World Economic Forum in Davos, told Reuters: "Normally speaking, the source code is not the ultimate documentation of anything, which is precisely the reason why programmers are required to provide comprehensive documentation to go along with their source code."

Kroes added that she wants to see more details of Microsoft's plans, but her initial scepticism may mean the company has not gone far enough to avert fines of €2 million day.

The fines will come into effect after February 15 if the Commission is not satisfied by Microsoft's formal response to the Commission's statement of objections.

Microsoft's appeal against the €497 million fine will be heard by the Court of First Instance in April.