Microsoft faces antitrust complaint in EU led by Nextcloud

Berlin-based software maker Nextcloud claimed that bundling OneDrive and Teams with Windows is harming local EU competition.

A group of tech companies in the EU, led by German software maker Nextcloud, has called out Microsoft on anti-competition grounds for favouring its own products on the market-leading Windows OS.

Berlin-based Nextcloud claimed that by bundling services such as OneDrive and Teams with Windows for new customers, and “aggressively” asking them to sign up, Microsoft is making it hard for EU businesses to compete.

“This is quite similar to what Microsoft did when it killed competition in the browser market, stopping nearly all browser innovation for over a decade,” said Nextcloud founder and chief executive Frank Karlitschek, referring to Internet Explorer.

Microsoft bundled Internet Explorer with Windows in the 1990s and 2000s to compete with other tech players such as Netscape. This led to some of the early antitrust cases in the EU against Big Tech.

“Copy an innovator’s product, bundle it with your own dominant product and kill their business, then stop innovating. This kind of behaviour is bad for the consumer, for the market and, of course, for local businesses in the EU,” Karlitschek added.

Nextcloud’s said that three big tech companies dominate two-thirds of the market in Europe. Microsoft, Google and Amazon together account for 66pc of the cloud market, according to a report earlier this year, while local businesses have seen their share drop from 26pc to 16pc.

The coalition behind the complaint, which involves industry representatives such as the European Digital SME Alliance, is demanding that the EU takes action to prevent gatekeeping and allow a level playing field for local businesses in Europe competing in the same sectors.

“Together with the other members of the coalition, we are asking the antitrust authorities in Europe to enforce a level playing field, giving customers a free choice and to give competition a fair chance,” added Karlitschek.

Sebastiano Toffaletti, secretary general of the European Digital SME Alliance, said that smaller tech companies are capable of being as innovative as Big Tech and achieve market success if given the chance.

“Only by forcing everyone to play by the rules, consumers will be able to choose the best digital products in an open and competitive market, where also SMEs can win.”

A formal complaint has been made to the European Commission’s competition authority led by Margrethe Vestager, who has been taking on Big Tech with several antitrust investigations. Nextcloud has also filed a complaint with Germany’s antitrust authority and is in talks for doing the same in France.

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