Germany’s Federal Cartel Office (FCO) has opened a proceeding to determine if Microsoft’s business in Germany can be subjected to special abuse measures. The investigation is being conducted under abuse control laws that went into effect in early 2021, granting the agency the authority to prohibit large companies from engaging in certain business practices if they’re harmful to competition. The FCO is taking the formal step of investigating Microsoft, but not actually filing an antitrust claim against the company at this stage.
Microsoft’s Expansive Digital Ecosystem Under Scrutiny
Microsoft’s extensive digital ecosystem across various markets, including operating systems, office software, cloud computing, gaming, professional networking, Internet search, and AI applications are now under scrutiny by the German watchdog. Microsoft’s pervasive product range constitutes an apparent threat that warrants closer scrutiny by regulatory authorities.
The FCO President, Andreas Mundt mentioned that Microsoft’s strong position with Windows and Office products has continuously expanded its product range for both business customers and consumers. Notably, the importance of Microsoft’s cloud services like Azure and OneDrive and the success of Teams, a software for video conferences and collaborative working have also been noted.
Microsoft’s active presence in gaming with Xbox, career networks with LinkedIn, internet searching with Bing, and AI applications has garnered more attention. Reports suggest that Microsoft has been seeking to apply data restrictions on users of its search index to prevent them developing their AI chatbots to retain the lead in the generative AI race.
Germany’s Special Abuse Control Regime
The FCO reviews of other digital giants like Google, Meta (formerly Facebook), and Amazon confirmed that the special abuse-controlled regime applies to their businesses. The German regime is an example of what’s to come across the European Union as the Digital Markets Act (DMA) comes into application later this year. The FCO has more advanced regulations of digital giants with a more proactive approach and updated powers to combat anticompetitive behavior.
Microsoft is not the only One
Microsoft is not the first US tech giant to attract the German watchdog’s attention. Google and Meta were also investigated and found to be companies of paramount significance. The decision by the Bundeskartellamt could lead to prohibiting anticompetitive practices, but at this stage, the agency is not looking at specific allegations of anticompetitive practices against Microsoft.
Microsoft has faced antitrust investigations and litigation in the past, including the US government’s lawsuit in the ‘90s and a recent investigation in the European Union over its acquisition of Activision Blizzard. Microsoft’s expanded and deepened its business across multiple digital markets over the past decade, including healthcare, digital advertising, and gaming, and has invested in OpenAI’s AI technology as well.
Conclusion
The investigation of Microsoft by Germany’s competition watchdog is a cause for concern for the company worth keeping an eye on. It could lead to possible restrictions on Microsoft’s activities in Germany or across Europe, along with possible hefty fines on potential anti-competitive practices. Microsoft will undoubtedly have to demonstrate that it’s operating within compliance with local laws and regulations if it wishes to continue doing business in Germany profitably. The outcome of this investigation could have a significant impact on other big tech companies operating in Europe as regulatory authorities become more proactive in curbing monopolistic behavior.
Image Source: Wikimedia Commons
