Microsoft faces new antitrust review for “bundling” new functions in products

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Many people in the technology industry claim that some of Microsoft’s actions are detrimental to fair competition, but no one dares to publicly accuse Microsoft.
Most startups complain that Microsoft tends to “bundle” new features in its products, which often compete directly with the startups’ core ideas.
In the past, Microsoft tended to bundle its software products, which was considered detrimental to competition, but NADELLA has led Microsoft to achieve two major transformations.
Many companies believe that Microsoft’s dominant position has not really changed, especially in the less eye-catching B2B field.
Tencent technology news on September 23: in July 2021, the British government invited start-ups, established companies and policy makers to consult on the most urgent competition issues in the technology industry, and then launched a new British digital marketing unit (DMU). According to people familiar with the matter, many strange things have happened behind the scenes. In private discussions, entrepreneurs claimed that Microsoft’s behavior was detrimental to fair competition, but no one dared to publicly accuse Microsoft at the meeting.
Most startups complain that Microsoft tends to “bundle” new features in its products, which often compete directly with the startups’ core ideas. But people familiar with the matter said that the founders of start-ups were too afraid of Microsoft’s counterattack to disclose their complaints. The founder of an enterprise software start-up said that if they stand up, Microsoft “will definitely kill” their business, which means they are worried that the technology giant will make their products incompatible with Microsoft’s software ecosystem.
The consultation on the UK digital marketing unit (DMU) is scheduled to end on October 1. No one is sure whether a British start-up will publicly condemn Microsoft. But this episode shows a shift that is taking place. Although Microsoft has basically not participated in the fierce discussion on the anti competitive behavior of large technology companies in the past decade, new entrants are increasingly worried about the company’s dominant position in the field of enterprise software and cloud computing. Regulators in the UK and Europe may soon begin to notice this as well.
NADELLA led Microsoft’s two successful transformations
In the past, Microsoft tended to bundle its software products (such as browsers and media players), which was considered detrimental to competition, but the EU has imposed millions of dollars in fines. However, since 2014, under the leadership of CEO Satya NADELLA, Microsoft has successfully achieved two major transformations.
First, Microsoft abandoned the software licensing model and adopted the cloud based subscription model of office 365. Subsequently, Microsoft reshaped its image of kindness and kindness, which is very different from other technology giants that often appear on the front page of newspapers due to violations of digital privacy and false news, and far from Microsoft’s ruthless reputation in the past. But many companies believe that the situation has not really changed, especially in the less eye-catching B2B field where “Microsoft is king”.
“Microsoft is still very strong in the commercial enterprise environment, especially its office suite. I heard some people in the market say that Microsoft is using its strong position in the enterprise environment to turn people into Microsoft cloud users,” said Maurits dolmann, partner of cleary Gottlieb Steen & Hamilton law firm
A recent example is the British company valuelicense, which specializes in buying and selling second-hand software licenses, especially Microsoft’s lifetime licenses. In April this year, the company sued Microsoft for damages of 270 million pounds (about US $370 million). The case will be heard in the high court of London in March 2022. Valuelicense claims that Microsoft intends to stifle the second-hand license market by providing companies that turn to cloud services such as office 365 with a discount by giving up lifetime licenses (rather than resale).
Jonathan Horley, founder of valuelicense, said: “since 2016, Microsoft has been using what we call ‘anti resale terms’ to effectively remove licenses from the market. Microsoft is depleting these permanent licenses in the whole market, which are worth billions of dollars, and they should have been with Microsoft (office 365) Competition, providing consumers with more choices and cost saving choices. ”
Holly said Microsoft’s approach also violated a 2012 European Court ruling that confirmed the buyer’s right to resell software licenses. Microsoft has applied to dismiss the case, insisting that the high court has no jurisdiction, and the company declined to comment on the ongoing legal affairs.
Microsoft acts or violates new EU regulations
Outside the UK, the biggest complaint is from European cloud computing service providers. Industry insiders believe that Microsoft is trying to use the popularity of office suite to beat competitors’ cloud services, and promote Microsoft’s own azure by providing discounts and additional functions for azure users and limiting the use of Microsoft software on competitors’ cloud services.
Francisco mingorance, executive secretary of the cloud service provider industry organization cispe, said that cloud service providers felt that they were being robbed of their business by large software companies. “What cloud service providers see is that customers are saying, ‘look, we like your solution. It is better and more flexible than what we use now. We are happy to sign up with you, but our current suppliers say that if we bring their software to your cloud, we will have to pay extra fees,” he said

Minglars added that although several client companies considered these practices unfavorable, they also remained silent in public. He said: “because these companies are afraid of retaliation. Due to software audit, many large companies do not want to disclose their ideas.” this means that they are worried about attracting the attention of software providers and may be severely punished if they are found to violate their terms of service.
Nevertheless, the market control of software companies may be challenged by new EU regulations. At the end of 2020, the European Commission announced a new and ambitious technical legislation proposal, the digital market act (DMA), which is expected to help solve many problems in the cloud computing service industry, focusing on the so-called “digital gatekeeper”. The bill aims to punish anti competitive practices, rather than waiting for them to play a role or even destroy the market.
The European Commission’s own impact assessment report clearly pointed out that “Microsoft 365 bundled with cloud services” is a potential example of unfair practices. Minglars said that it was partly the result of an awareness raising campaign planned by cispe and others. Several members of the European parliament proposed nearly 1200 amendments to DMA to strengthen its competition rules in the field of cloud computing.
This is not the only headache for Microsoft in Europe. The company’s most notable case has nothing to do with cloud computing, but more to do with another so-called software “bundling” case, which was filed by slack, a workplace communications giant. Last year, slack submitted a complaint against Microsoft to the European Commission, alleging that it was unfair for Microsoft to include its own communication system teams free of charge in the office 365 suite. The complaint said that Microsoft’s behavior is equivalent to “illegal and anti competitive behavior of abusing its market dominant position and stifling competition”.
Slack has previously said that Microsoft teams is a plagiarism of its products, and Microsoft is using it to unfairly weaken slack’s support for fee paying business users. Microsoft denies these allegations and can be said to have doubled its bet: when the company’s new windows 11 operating system is released on October 5, it will pre install the teams button on each desktop. A Microsoft spokesman said in a statement that the company “built teams to combine collaboration and video connectivity because this is what people want”, which makes this service more advantageous than slack. The European Commission’s investigation into the slack complaint is still ongoing.
Microsoft seems to be preparing for the coming changes. According to a study by the pressure groups corporate Europe Observatory and lobbycontrol, the company is already the third largest lobbying expenditure agency in the EU, second only to Facebook and Google. In June this year, Brad Smith, President of Microsoft, announced that he would increase the company’s legal staff by 20%, because he expected that “global technology supervision will be expanded” in the next decade. After nearly a decade of relative calm, Microsoft may have to join the antitrust war again. (reviewed by Tencent technology / Jinlu)