By Peter Gumbel

Microsoft's titanic struggle with Europe's trust busters appears to be finally drawing to a close — thanks in part to Windows 7, the new operating system the U.S. software giant is releasing worldwide this week.

The two sides have been at loggerheads for a decade over the European Union's allegations that Microsoft has abused its dominant market position to push its own products such as Windows Media Player and the Internet Explorer web browser on consumers by bundling them with Windows — to the detriment of rival companies. It's a battle Microsoft (MSFT) has fought vigorously, but largely lost; it has been dragged into European courts and hit three times with fines that, together, total well over $1.5 billion.

But as it has geared up to launch Windows 7, Microsoft has changed tune — and so have the Europeans. "There's been a lot of progress in the past few months," Jean-Philippe Courtois, the Paris-based president of Microsoft's international operations, told Fortune. The atmosphere, he says, "is more serene."

It's a sign of the growing détente that Courtois himself, a 25-year Microsoft veteran, is currently serving as an official "ambassador" for a jamboree called the "Year of Creativity and Innovation" organized by the E.U.'s executive commission — the same body that has been taking Microsoft to task over its business practices. He will be sharing a podium in Brussels in early November with the commission's president, José-Manuel Barroso, and the other 14 ambassadors. "We're trying to be a partner with Europe," Courtois says, pointing out that Microsoft spends about $600 million on research and development in Europe, and provides thousands of jobs in the region.

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UPDATE: Microsoft's own tests find IE8 faster than Firefox. See links to pdfs here. Independent reports treat the company's tests somewhat skeptically. See here and here.

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I have not tested Internet Explorer 8 — the new version of Microsoft's (MSFT) industry-leading Web browser, which was released here on Thursday. And since Microsoft has made it clear that it has no intention of writing a version for the Apple (AAPL) Macintosh, I may never use it.

However, I've gone through the promotional videos and read some of the early reviews, starting with Walt Mossberg's in the Wall St. Journal, and I gather it's a significant advance over IE7 with some fine new features and none of the obvious flaws Vista had coming out of the box. But it has a fundamental problem. As Walt puts it in the last graph of his laudatory review, damning IE8 with faint praise:

"If it were faster, I would say it was the best browser currently available for Windows." (link)

Microsoft's new browser, according to Mossberg (who is backed up by independent tests  — see here and here), is slower than Firefox, Google’s (GOOG) Chrome, and even the Windows version of Apple’s Safari 4. Which makes me wonder whether IE8 might do for Microsoft's dominant position in the Web browser market what Vista did for Microsoft's monopoly position on the PC desktop.

What am I talking about? Let's go to the pie charts below the fold.

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