Microsoft signed an agreement with the EU in 2009 to give Windows users additional options for Internet browsers.
The European Union (EU) has fined Microsoft €561m for the company's failure to provide users with a choice of Internet browsers.
Under the deal thrashed out in 2009, Microsoft was required to offer users a choice of browsers until 2014, to enable them to switch to their preferred web browser. Users needed to see a 'browser choice' screen to be aware of their options.
The investigation by the EU's antitrust arm, the European Commission (EC), found that until July 2012, about 15.3 million users did not see the choice screen as stated in the agreement.
EU competition commissioner, Joaquin Almunia, said: "If companies agree to offer commitments which then become legally binding, they must do what they have committed to do or face the consequences - namely, the imposition of sanctions."
"I hope this decision will make companies think twice before they even think of intentionally breaching their obligations or even of neglecting their duty to ensure strict compliance," Almunia said.
Microsoft said the company takes full responsibility for the technical error that caused the problem.
"We provided the Commission with a complete and candid assessment of the situation, and we have taken steps to strengthen our software development and other processes to help avoid this mistake - or anything similar - in the future," Microsoft said.
The EU had previously fined Microsoft $2.17bn during its antitrust investigations that included a €899m penalty for not complying with court's order to share data with its rivals.
Apart from Microsoft, Google may also face a fine of about $1bn for its data privacy policies as new EU regulations allow a single regulator to fine companies they feel are not complying with privacy laws.