Microsoft finally admitted defeat in its nine-year battle with the European Commission on Monday, agreeing to allow competitors access to technology that Brussels said would create more innovation in the software market.

The US software developer agreed to comply with the EU antitrust regulator’s finding that it was abusing its dominance, upheld by the European Court in 2004. The result would be lower prices and more choice for customers, the Commission said.

“I welcome the fact that Microsoft has finally undertaken concrete steps to ensure full compliance with the 2004 decision,” Neelie Kroes, competition commissioner, said in Brussels. “It is regrettable that Microsoft has only complied after a considerable delay, two court decisions and the imposition of daily penalty payments.”

Steve Ballmer, Microsoft chief executive, agreed early on Monday to make it easier and cheaper for rivals to link their products to some classes of its software. While only affecting software for so-called “workgroup” servers, widely used but low-value software that manages jobs such as printing from networked computers in an office, the decision is the first tangible result of Microsoft’s defeat before the European Court of First Instance, Europe’s highest court, last month.

Thomas Vinje, counsel for ECIS, a trade association that represents rivals such as Adobe and IBM, said: “This is a significant step forwards. The innovation is there but is held back by the lack of inter-operability.”

Under Monday’s settlement, Microsoft said it would allow open-source software developers access to inter-operability information for work-group servers used by businesses and other large organisations. Microsoft has 95 per cent of the market share in desktop publishing and more than 70 per cent in work-group server operating systems.

Other technology companies using this information will only have to pay a €10,000 ($14,300) one-off fee rather than a percentage of revenues from any software developed as a result. Also, the EC imposed lower royalties for other uses of the software, reducing it from 5.95 per cent to 0.4 per cent.

Microsoft also said it would not appeal against the decisive CFI ruling in September, which upheld the Commission’s finding. The decision was the culmination of an investigation that began in December 1998.

“We will not appeal [against] the CFI’s decision to the European Court of Justice and will continue to work closely with the Commission and the industry,” the company said.

In 2004 Microsoft was fined €497m for market abuse. It was also fined €280.5m in 2006 for failing to comply with the 2004 decision. Ms Kroes said the Commission would now rule “as soon as possible” on whether and how much to fine Microsoft for failing to comply until today with a March ruling that it had overcharged for information.