Microsoft Corp. (MSFT) and the European Union squared off Thursday for a hearing that gives the software giant a last chance to defend itself before regulators decide whether to impose daily fines of 2 million euros ($2.4 million).

Microsoft insisted it had lived up to antitrust demands and was ready to go even further, but EU spokesman Jonathan Todd said the company still has to comply with a 2-year-old antitrust order to share technical information with rivals.

"The best outcome for everybody would be that Microsoft were to finally do that," he said.

The EU has threatened the fines backdated to Dec. 15, saying the technical manual Microsoft provided that month needed a radical overhaul to make it usable.

Company lawyer Brad Smith, arriving for the start of the two-day hearing, said fines were "not the answer" and that the U.S. software maker had gone beyond complying with the EU's 2004 antitrust order that it share technical information with other software companies.

"We have complied and we are willing to do more," he said. "But we cannot do it alone. Interoperability in our industry happens through dialogue and engagement, not through fines."

Todd said the European Commission wasn't asking Microsoft to go beyond what it was told to do two years ago.

"It would be quite sufficient for them to do what they are supposed to do in accordance with the Commission's decision of March 2004," he said. "They only have to provide technical interface information to competitors to allow them to make products that are interoperable with Microsoft Windows. That's all."

Todd said the EU had already clearly spelled out "in black and white" Microsoft's obligations in the original 302-page antitrust order.

The EU said there was no deadline for a decision on the fines.

"It will be at least several weeks because it's a complicated matter and we will have to digest very carefully the information that we obtain from the hearings and the information that we have obtained in writing," Todd said.

Smith said Microsoft would say at the hearing that the technical manual that the independent monitor branded "unusable" met industry standards.

In a statement, Microsoft said six technology companies would tell the hearing that they were using the "useful and helpful" manual to create software compatible with Microsoft's products.

It named four of them as EMC Corp. (EMC), StarBak Communications Inc., Tandberg Television Ltd. and Network Appliances (NTAP).

Todd, though, said many companies had told the EU that the information Microsoft provided was not suitable.

"Our independent trustee — who is advising the Commission, who was suggested to us by Microsoft — Professor Barrett, has told us that the documentation is, to quote, 'totally useless,'" he said.

Carlo Piana, a lawyer for the Free Software Foundation Europe, said there is little doubt that Microsoft knows what it is supposed to do. He said providing complete information to other software companies was only a first step as the open source developers he represents want wider changes to licenses for using communication code that would allow them distribute software without charging a fee.

The FSFE is funded by private individuals and receives no financial support from major software companies.

Software producers involved in the case — such as Sun Microsystems Inc. (SUNW), IBM Corp. (IBM), Oracle Corp. (ORCL) and Novell Inc. (NOVL) — and industry groups that back the EU will also have a chance to speak at the hearing.

An EU antitrust official, Cecilio Madero Villarejo, said Microsoft had insisted these companies leave the room when the independent monitor — computer science professor Neil Barrett — shows extracts of Microsoft's technical documents. The company claimed this could break business confidentiality.

Microsoft had earlier asked the Commission to open the hearing. The Commission refused, saying such hearings were always held behind closed doors.

The company canceled planned press briefings after the EU official appointed to listen to Microsoft's defense, hearing officer Karen Williams, asked those involved to respect the confidentiality of the process.

Todd said the hearings existed to give Microsoft the chance to explain its point of view and to establish the facts.

Microsoft's bid to compel Sun, IBM, Oracle and Novell to hand over correspondence with Barrett and EU officials hit a hurdle Thursday after a California court turned down its request to order its rivals to provide evidence for Microsoft's forthcoming legal challenge against EU regulators, Dow Jones Newswires reported.

Courts in Massachusetts and New York still have to rule on the request

The EU's second-highest court will hear Microsoft's appeal against the 2004 ruling in April.