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Anti-trust complaints target Microsoft in the European Union

Microsoft comes under pressure as software suppliers raise market abuse complaints with the European Commission over bundling of Defender security software with Windows

Security technology suppliers have complained to European Union (EU) officials over Microsoft’s alleged abuse of its dominant market position in Europe, according to official EU sources.

A high-level EU official from the European Commission (EC) competition directorate said at least three security software companies had “met several times” with the EC to raise alleged market abuses by Microsoft.

The complaints centre on Microsoft’s free security software add-on, Defender, included by default in the Windows 10 operating system. Security companies claim the tactic is shrinking the market for competing security software.

The latest complaints come on top of plans announced by Russian security software company Kaspersky in November 2016 to submit a formal anti-trust complaint against Microsoft to the European Commission.

The dispute has parallels with the European Commission investigation into Microsoft bundling the Internet Explorer browser into Windows. Microsoft settled the dispute by offering customers the option of choosing other default browsers in 2009 but was fined £485 million in 2013 for breaching the agreement.

Commission official claims Microsoft is ‘abusing its position’

One EU official, who worked on an anti-trust case brought against Microsoft in 1998 - which led to Microsoft paying a multi-million fine - said at least three more security suppliers had complained about alleged market abusesby Microsoft, including its bundling of Microsoft Windows Defender.

The official at the EC’s Directorate-General for Competition, who asked to remain anonymous, said the Commission was “aware” of Microsoft competition tactics. “Microsoft is abusing its dominant position,” he claimed.

The European Commission is currently busy with anti-trust charges against Google, which allege that the company is abusing its dominance in search to favour its own Ad Sense advertising business. It is also investigating whether Google gives preference to its own products, including Google Search and Chrome, in its Android operating system. 

“Because our current focus is on Google, but also because of our way of acting, we’re waiting for a formal complaint [against Microsoft] from a competitor,” the official said.

Shared memos, meetings in Brussels and phone calls between the EC and those software companies that had lodged complaints intensified after Microsoft launched Windows 10 in October 2014. The exchanges are still ongoing, and the software suppliers expect the EC will eventually take action.

Confidential memo claims market abuse

In a confidential memo sent to DG Comp in Brussels last year, one security software supplier complained that Microsoft had broadened its definition of the Windows operating system to distribute other Microsoft software.

“Microsoft is, in fact, extending the concept of the operating system to any other software that Microsoft produces or will produce in the future, in order to leverage or ‘piggyback’ on the ubiquity of Windows and other popular Microsoft software,” it said.

The memo claimed Microsoft was “taking an artificial distribution advantage versus other competitors”, unrelated to the merits of the software products themselves. “For Microsoft, any Microsoft software can or will be made or ‘presented as’ a component of Windows.”

Security companies lobby against Microsoft

Other software companies are lobbying the European Commission to address Microsoft’s competition tactics. Some of them are considering pressing similar complaints, but have not yet mustered the courage because of the high costs such a case could bring and the time it would take to solve.

They argue that Defender is an anti-malware and antivirus application that “crashes competition” because it is provided free of charge for Windows buyers.

Separately, antivirus specialist Kaspersky is formalising its grievance over Microsoft’s alleged violation of the European Union’s competition rules. “We have made the decision to bring this case to the European Commission and are currently preparing the application”, said a Kaspersky Labs spokesperson.

In practice however, the Commission does not have to open any formal infringement procedure “even if it considers a breach has occurred”, according to EC rules.

If and when the EC Directorate-General for Competition receives the complaint, it will have to decide whether to open a formal procedure.

In 2012, Microsoft lost the anti-trust case brought against the company by the European Commission’s competition watchdog in 1998.

Kaspersky claims Defender is anti-competitive

Yevgeny Kaspersky, the 52-year-old CEO of the Russian security software company, wrote on his blog in November 2016: “We think that Microsoft has been using its dominating position in the market of operating systems to create competitive advantages for its own product.

“The company is foisting its Defender [software] on the user, which isn’t beneficial from the point of view of protection of a computer against cyber attacks. The company is also creating obstacles for companies to access the market, and infringes upon the interests of independent developers of security products.”

Microsoft accused of aggressive tactics

The same argument has been presented to the EC’s competition directorate by another company, which has also asked to remain anonymous.

“From a security perspective, it can actually be risky to have Microsoft aggressively pushing, exclusively, its own anti-malware product because of the monoculture risk,” it said.

 “Anti-trust complaints are expensive and take too long,” a spokesperson from another European security software company said. Speaking under anonymity, he said his company preferred to have dialogue with the Directorate-General for Competition rather than make a formal anti-competition complaint against Microsoft, given the potential cost of a trial.

Russian anti-trust investigation

In November 2016, following a complaint from Kaspersky, the Russian antitrust authority opened a formal investigation targeting Microsoft. 

Kaspersky’s general director, Igor Chekunov, was quoted by the Russian press to launch clear accusations against the US software giant’s strategies: “Microsoft has created a situation in which competing antivirus producers, including Kaspersky Lab, are unable to completely fulfil their obligations to customers, which leaves the latter helpless, limits their choices and leads to third-party producers incurring financial losses.”

Microsoft Europe did not wish to comment when asked for an interview.

Investigate Europe reporting team: Maria Maggiore, Paulo Pena, Crina Boros, Bill Goodwin

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