The European Union (EU) has warned Microsoft it could incur additional fines unless it makes more effort to stop abusing its dominant position.
Microsoft is under growing pressure to speed up compliance with EU laws
The comments were made by an EU spokesman after a meeting between EU competition commissioner Neelie Kroes and Microsoft boss Steve Ballmer.
In March 2004, the EU found Microsoft guilty of preventing competition, and ordered it to open up its systems.
A year later, the EU says the software giant has not done enough.
In addition to a 497m euro ($640m; £343m) fine in March 2004, the EU ordered Microsoft to open up its core software systems to rivals.
This was to better enable other software manufacturers to make programmes that worked more seamlessly with Microsoft's Windows operating system.
Microsoft was also ordered to provide a version of Windows without its own Windows Media Player.
Following Ms Kroes' meeting with Microsoft chief executive Steve Ballmer, EU spokesman Jonathan Todd said Europe remained unhappy on both counts.
Although Microsoft brought out a version of Windows without Media Player last month, Mr Todd said Ms Kroes was not convinced it was technically up to standard.
"Over a year has elapsed and as of today we are not in a position to say that we are satisfied that Microsoft has complied fully with that decision," he said.
"Mrs Kroes said that the Commission expects the decision adopted in March 2004 to be complied with urgently and in full, and she added that unless this was the case that the Commission would be obliged to take formal steps to ensure compliance."
Under EU rules Europe could fine Microsoft up to 5% of its daily global turnover for each day that a decision is not applied to its liking.
A spokesman for Microsoft said the meeting with Ms Kroes was at Microsoft's request and "part of the ongoing dialogue" the company has with the EU.