June 20. 2024. 12:52

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Microsoft set to join Germany’s special watch competition regime


The German competition authority Bundeskartellamt took the initiative on Tuesday (March 28) to examine whether Microsoft is of paramount significance for competition across markets.

The decision is the first formal step for the Bundeskartellamt to assess whether Microsoft should be subject to a special abuse control regime, which already covers the other Big Tech companies: Google’s Alphabet, Facebook’s Meta, Apple, and Amazon.

To qualify for this specific competition regulatory framework, the technology companies must exhibit significant market power across a range of digital markets. That is according to section 19a of the German Competition Act (GWB), which allows the national antitrust watchdog to prevent digital giants from implementing anti-competitive practices.

“Most recently, the company has attracted attention with the integration of AI applications,” said Andreas Mundt, president of the Bundeskartellamt.

The reference is to Microsoft’s $10 billion investment in OpenAI, the company that developed the extremely successful chatbot ChatGPT.

“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,” Mundt added.

According to the German competition authority, it also recently witnessed the significance of cloud services linked to Microsoft applications Azur and OneDrive, and the software for video conferences, Microsoft Teams.

The European Commission is also currently looking into a complaint from Slack regarding Microsoft’s alleged bundling of Microsoft Teams in its Office package.

A Microsoft spokesperson told EURACTIV that “as a major technology company, we are mindful of our heightened responsibility to support a healthy competitive environment. We will engage constructively with the Bundeskartellamt as they seek to understand our role in digital markets”.

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German Competition Act

The 10th amendment to the German Competition Act (GWB) came into force in January 2021. Section 19a GWB is considered a key provision for more effective oversight and enables the Bundeskartellamt to intervene earlier and more effectively against anti-competitive practices of large digital companies.

The validity of the Bundeskartellamt’s decision is limited to five years in accordance with statutory provisions.

While the Bundeskartellamt will assess Microsoft’s significance for competition among digital markets, the initiated proceeding will not examine specific practices employed by Microsoft.

The antitrust body specified that if findings proved practices undermining competition, a separate proceeding would have to be initiated after consultation with other competition authorities, such as the European Commission on the EU level.

German competition authority tightens its grip on Meta

Stricter antitrust measures can be taken against US giant Meta, Germany’s Bundeskartellamt announced on Wednesday (4 May), after similar measures were taken toward Google. Meanwhile, Germany is lobbying for stricter EU competition rules.

Other Big Tech companies

The initiative against Microsoft comes after the German antitrust body determined already with binding effect in 2022 that Alphabet/Google, Meta, and Amazon are of paramount significance for competition across markets.

The binding decision against Alphabet Inc. and its subsidiary Google was delivered by the Bundeskartellamt on 5 January 2022.

Four months later, on 4 May 2022, the authority also formally found valid the paramount significance for competition across markets of Meta Platforms, Inc.

On 5 July 2022, the Bundeskartellamt determined that Amazon and its subsidiaries are subject to Section 19a GWB. Even though Amazon appealed the decision to the German Federal Court of Justice, the decision remains preliminarily enforceable until the court’s decision.

Then, in November 2022, the antitrust body extended Section 19a GWB to two ongoing abuse control proceedings addressing the practice of algorithmic control of price-setting by third-party sellers on the Amazon Marketplace and disadvantages for marketplace sellers due to instruments applied by Amazon.

The proceedings will assess whether these practices violate German competition law.

In the case of Apple, the proceeding was initiated on 21 June 2021 and is, according to the Bundeskartellamt, ‘well advanced’.