The U.S. firm admitted it acted wrongly.
It was an unprecedented sanction that will act as a warning to other firms involved in EU antitrust disputes.
It said the U.S. software company had broken a legally binding commitment made in 2009 to ensure that consumers had a choice of how they access the internet, rather than defaulting to Microsoft’s Explorer browser.
An investigation found that Microsoft had failed to honour that obligation in software issued between May 2011 and July 2012, meaning 15 million users were not given a choice.
It is the first time the European Commission, the EU’s anti-trust authority, has handed down a fine to a company for failing to meet its obligations.
While sizeable, it could have levied a fine of up to 10 per cent of Microsoft’s turnover.
“If companies agree to offer commitments which then become legally binding, they must do what they have committed to do or face the consequences,” Joaquin Almunia, the EU’s competition commissioner, told a news conference.
“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.”
Microsoft said it took full responsibility for the incident, which in the past it has blamed on a technical error.
It did not say whether it would challenge the ruling, but it is not expected to do so, in part not to antagonize regulators.
“We have apologised for it,” Microsoft said in a statement.
“We provided the Commission with a complete and candid assessment of the situation.
“We have taken steps to strengthen our software development and other processes to help avoid this mistake – or anything similar – in the future,” it said.