Examination of Microsoft’s significance for competition across markets

Today the Bundeskartellamt has initiated a proceeding against Microsoft to examine whether the company is of paramount significance for competition across markets.

The proceeding is based on the powers the Bundeskartellamt received as part of the extended abuse control rules regarding large digital companies, which were introduced in early 2021 (Section 19a German Competition Act – GWB). In a two-step procedure the authority can prohibit companies of paramount significance for competition across markets from engaging in certain anti-competitive practices.

The Bundeskartellamt has now initiated the first step against Microsoft, that is a proceeding to determine whether the company is of paramount significance across markets. The existence of a digital ecosystem which extends across various markets can be an indication that a company holds such a position. It is often very difficult for other companies to contest the positions of power associated with this.

Andreas Mundt, President of the Bundeskartellamt: “With Windows and its Office products Microsoft has had a long-standing and very strong position with regard to operating systems and office software. Based on this, the company has continuously expanded its product range both for business customers and consumers. More recently, we have seen a strong increase in the importance of the cloud services Azure and OneDrive, which are often linked to other Microsoft applications, and the resounding success of Teams, a software for video conferences and collaborative working. In addition, Microsoft is also active in other areas, including gaming with its Xbox, career networks with its service LinkedIn or internet searching with its search engine Bing. Most recently, the company has attracted attention with the integration of AI applications. In light of this, there are good reasons to examine whether Microsoft is of paramount significance for competition across markets. Such a finding would allow us to take action at an early stage and prohibit possible anti-competitive practices.”

Today’s decision to initiate a proceeding does not yet entail a proceeding to assess specific practices employed by Microsoft. If complaints or other information suggest that there are indications of Microsoft engaging in potentially anti-competitive practices, a separate decision will have to be issued in this matter – also in consultation with the European Commission and possibly other competition authorities.

The Bundeskartellamt has already determined with binding effect that the companies Alphabet/Google (see press release of 5 January 2022) and Meta (see press release of 4 May 2022) are of paramount significance for competition across markets. Amazon has appealed the decision in which the authority established a finding to that effect. The appeal proceeding is pending before the Federal Court of Justice (see press release of 14 November 2022). The Bundeskartellamt’s assessment as to whether the Apple corporation holds such a position is well advanced (see press release of 21 June 2021).