European antitrust regulators are moving ahead with plans to require Microsoft Corp. to separate its digital media-playing software from its Windows operating system, according to sources familiar with the case.

Although details of the order are not yet settled, sources said Monday that Mario Monti, who oversees the European Commission's competition directorate, is circulating a draft of his conclusions in the case to other commission directors, a prelude to a final ruling.

Forcing Microsoft to "unbundle" its Windows Media Player software would be the most significant sanction against the software giant in its antitrust disputes on both sides of the Atlantic. Microsoft could face the possibility of different legal requirements for the design of its software on two continents.

In the United States, the Justice Department settled antitrust charges two years ago by requiring Microsoft to give users and computer makers the ability to hide access to its media player and other software.

A coalition of state attorneys general balked and pressed for an unbundling requirement, but a federal judge sided with the Justice Department. One state, Massachusetts, is appealing that ruling.

European authorities have accused Microsoft of using its operating-system dominance to squelch rivals who provide alternatives for several applications, including media playing and server software, which powers networks of computers.

By including the Windows Media Player with the operating system - which is on 95 percent of the world's personal computers - Microsoft gains a huge advantage over its rivals. Competitors, such as RealNetworks Inc., must rely on users downloading its software separately, or on computer manufacturers including the software in new machines.

RealNetworks, which has testified in Microsoft's European hearings, recently sued Microsoft for civil antitrust violations.

A Microsoft spokesman said the company still hopes to settle the European case, but added that until then, the European Commission's move is "part of the process."

In two previous versions of a "statement of objections," which are equivalent to legal findings, Monti's staff concluded that Microsoft should be required to provide its media player separately, and to force the software giant to disclose more technical information so rival server systems could operate well with Windows. The commission also could fine Microsoft as much as $3 billion, although a penalty of that magnitude is considered unlikely.

A source familiar with the commission's deliberations said it is proceeding with an unbundling rule, despite intense Microsoft lobbying to avert it.

A final European Commission decision is expected before summer.