Yesterday's meeting between European competition commissioner Mario Monti and Microsoft chief executive Steve Ballmer broke up early without any apparent meeting of minds.
Monti is demanding even tougher remedies from Microsoft in return for a settlement that averts a precedent-setting negative ruling in a week.
Sources said Monti's meeting with Ballmer was brief. It followed a four hour meeting with Microsoft's chief lawyer Brad Smith the day before. The source added that another face-to-face meeting between Monti and Ballmer is "unlikely".
If no settlement is reached between now and next Wednesday, the European Commission is scheduled to adopt a negative ruling forcing Microsoft to offer two versions of its Windows operating system in Europe: one with Microsoft's music and video software, Media Player, stripped out of the operating system and sold separately.
The ruling will also order Microsoft to license more secret code in Windows to allow rivals to build software that works smoothly with Windows, and it will fine Microsoft between €100m and €1bn for having broken EU antitrust laws.
To waive the ruling, Monti wants Microsoft to commit not to distort competition by bundling peripheral software programs to Windows in the future.
Microsoft spokesman Tom Brookes said efforts to reach a settlement are ongoing.
The commission declined to comment on what Monti is seeking in a settlement. "We are on track to make an announcement next week," said commission spokeswoman Amelia Torres, adding that negotiations with Microsoft continue.
The second strand of the commission's case concerning interoperability is expected to be easier to remedy, but people close to yesterday's talks said this issue also remains unresolved.
Paul Meller writes for IDG News Service