The world's No. 1 software company agreed with the European Commission three years ago to offer browser choices, in what had been coined the internet "browser war".
But the European Commission, which acts as antitrust watchdog in the EU, said in July this year that Microsoft had not complied with the order for over a year – between January 2011 and then.
"The European Commission has informed Microsoft of its preliminary view that Microsoft has failed to comply with its commitments to offer users a choice screen enabling them to easily choose their preferred web browser," the Commission said in a statement.
"When Microsoft launched Windows 7 service pack 1 in February 2011, the choice of screen was no longer displayed," said Joaquín Almunia, the EU's top competition official, indicating that Microsoft had acknowledged this.
"This means that those users have not seen the choice of screen in the period from January 2011 until July 2012," Almunia told a regular press briefing on Wednesday.
The EU's top antitrust official reminded that companies had to live up to their commitments as the fastest way to solve antitrust concerns "or face the consequences".
The company blamed the lapse on "a technical error", saying it took the matter "very seriously" and pledging to cooperate fully with the Commission.
The Commission's announcement is the first step in an antitrust proceeding that could lead to a fine amounting to as much as 10% of Microsoft's global turnover.
The Commission said it had sent a statement of objections or charge sheet to Microsoft detailing the infringement. The company now has four weeks to respond and it can request an oral hearing to spell out its arguments.