I don't get it either. Apple does the exact same thing and are the only real competition to MS. Most of the players out there are rubbish anyway.
The big difference is that microsoft has been ruled to be an monopolist, both by the US supreme court & the European courts. When you have a monopoly, you're bound by some additional rules & regulations that non-monopolists aren't.
It's illegal to (ab)use a monopoly in one area (desktop operating systems) to extend into another area. If you have 90%+ of the desktop market and bundle unrelated items with your product, you essentially abuse this 90% market share to push others out of their market segment. In microsoft's case, the 'media player' market. On the horizon are other cases regarding antivirus, spyware, etc. which are deemed not to be part of an operating system but add-ons.
So yes, it does mean that microsoft has to follow certain rules that Apple doesn't, simply because they have such a huge market share. But should Apple all of a sudden get a huge boost in size and microsoft's market share drops a couple of dozen percent, at that point Microsoft can bundle pretty much anything they feel like.
But as long as they are a monopoly, they can't.
While this is being spun as a 'EU vs. US' in some of the US media, that's not really the case. The companies that have to gain the most over these rulings are Apple (Quicktime) and Real Networks (RealVideo), both US companies as well.
Now, it will be very interesting to see how the EU demands for opening up additional windows API's and Fileformats are going to pan out... so far microsoft has made an half-assed attempt to 'let people see the actual source for windows (tm)' claiming to go above and beyond the requirements, but that has been deemed irrelevant so far -- actual API's and format descriptions are a world of difference over a can of spaghetticode that you have to sign over your first born for to be allowed to view.
finally "can Europe really do this?" -- they can do whatever they want. This is not a dispute between companies, this is a dispute between a corporation and souvereign nations. Governments make laws, governments enforce laws, and corporations have to follow the laws if they choose to do business in said countries. If microsoft doesn't like it, they could choose to not do business in Europe. That's not going to happen considering that the EU has one and a half times the population of the US, is just as industrialized/dependend on computers as the US, and is a huge market for Microsoft. If they want to continue to do business, they have to follow the laws.
Microsoft chose not to do so - more than likely, knowingly. Now they have to abide the consequences of that decision.
What's so hard to understand about that?