The EC issued a "statement of objections" last week, which said Microsoft had illegally bundled its Windows Media Player - software that allows users to see and hear audio and video files without lengthy downloads - with its dominant Windows operating system.
The commission said that by tying Media Player with the Windows operating system, which has a 95% market share, Microsoft may thereby deprive PC manufacturers and final users of a free choice over which products they want to have on their PCs.
This presented particular problems for consumers as there are no ready technical means to remove or uninstall the software.
The result was a weakening of effective competition in the market, a reduction of consumer choice and less innovation, the EC said.
Although the commission stated that it would not seek to block the launch of Windows XP, which is due for release on 25 October, it said it would follow market developments and was ready to take steps if necessary.
However, a legal expert said given the length of the complaints procedure future versions of Windows were more likely to be under threat of changes.
"If the EC rules against Microsoft, it could order the company to stop the illegal practices," said Struan Robertson, a solicitor at law firm Masons.
"Future versions [of Windows] may require further unbundling and PC manufacturers may be given more scope to use their discretion when installing software," Robertson said.
The commission also restated allegations that Microsoft may have violated European antitrust rules by using illegal practices to extend its dominant position in the market for PC operating systems into the market for low-end server operating systems.
"Server networks lie at the heart of the future of the Web and every effort must be made to prevent their monopolisation through illegal practices," said Mario Monti, competition commissioner at the EC.
"The commission also wants to see undistorted competition in the market for media players."
Jean Phillipe Courtois, president of Microsoft in Europe, said, "We are confident that once it has completed its investigation, the European Commission will be assured that we run our business in full compliance with EU law."
The EC issued its first statement of objections to Microsoft in August last year, following a complaint by Sun Microsystems, a rival in the server market.
The next hearing in the antitrust action brought by the US Justice Department is set for 21 September, and Microsoft is considering bringing forward the launch of Windows XP to beat that deadline.