European Commissioner Neelie Kroes said, "millions of European customers will benefit," from the agreement in which Microsoft said it would send software to customers that allows them to choose rival browsers to Microsoft's Internet Explorer, The New York Times reported.
Microsoft said it would offer 11 options to consumers, including rival browsers produced by Mozilla and Google.
The case settled Wednesday was filed by a small Norwegian company, Opera, in October 2007. Google and Mozilla later joined the case, which centered on Microsoft bundling Internet Explorer with its operating system.
Microsoft said it was "pleased" with the settlement, while Google called it a game changer.
"I think this settlement has the potential to change the status quo. Most consumers in the past have chosen Internet Explorer because it came on their computers. Now the decision will be made on the merits," said Google's vice president of product management Sundar Pichai.
Microsoft has already paid $2.45 billion in fines from the European Commission to settle other antitrust cases, The Financial Times reported.