CCI Clears Microsoft of Antitrust Violations

The Competition Commission of India (CCI) has dismissed an antitrust complaint against Microsoft, clearing the Redmond, Washington-based company of violations under the Competition Act, 2002.

In this case, the grievances of the informant primarily related to alleged abuse of dominant position by Microsoft by way of bundling its antivirus product, Microsoft Defender, in Windows Operating System (OS), thereby violating provisions of Section 4 of the Act.

Though Microsoft was prima facie found to be dominant in the market for licensable OSs for desktops/laptops in India, the Commission returned a finding that no alleged contravention of the provisions of Section 4 of the Act against Microsoft was made out.

The decision of the Commission is summarised below:

• Inclusion of Microsoft Defender not an unfair condition: Considering the absence of an element of compulsion on users to exclusively use Microsoft Defender as their antivirus solution, the Commission observed that its inclusion with Windows OS could not be said to constitute an imposition of an unfair condition within the meaning of Section 4(2)(a)(i) of the Act.

• Impediment to scientific development not proved: The allegations against Microsoft in respect of any actual or potential impediment to technical and scientific development were noted to be largely speculative and to lack relevant proof of harm. Consequently, there appeared no restriction on the “technical or scientific development relating to goods or services to the prejudice of consumers” as envisaged under Section 4(2)(b)(ii) of the Act.

• Case of tying not made out: It was held that the conduct of bundling Microsoft Defender with Windows OS was not in violation of Section 4(2)(d) of the Act.

Although the tying and tied products were two separate products and Microsoft was held to be dominant in the market for the tying product, the other conditions to conclude a case of tying were not made out. Firstly, there was no compulsion to purchase/use the tied product to use the tying product, as users were free to use alternative solutions from third-party providers. Secondly, there was no evidence that the bundling restricted or foreclosed competition in the market, as evidenced by the continued presence and strong competition from major cybersecurity firms like Bitdefender, McAfee, and others since the launch of Windows 10.

• Use of dominant position to enter other relevant market: The Commission noted that in the absence of compelling evidence of restrictive practices, the allegation that Microsoft leveraged its dominance in the operating system market to protect its position in the computer security software market, in violation of Section 4(2)(e) of the Act, does not appear to be substantiated.

• No restriction of rival developers’ market access: The Commission also dismissed claims that Microsoft violated Section 4(2)(c) of the Act by hindering the development of and denying market access to rival security software developers. Contrary to submissions that Microsoft Virus Initiative (MVI) membership was mandatory for listing in the Microsoft Store, the Commission observed that non-MVI antivirus developers were not restricted from distributing their applications on Windows, as they could do so through the Microsoft Store and direct downloads from their websites.

With this, the Commission opined that there existed no prima facie case of contravention and directed closure of the information filed.

Around nine years ago, a Russia-based cybersecurity firm accused Microsoft of abusing its dominant position to unfairly harm third-party antivirus providers. The matter later came to be settled, with Microsoft agreeing that it will provide antivirus vendors greater visibility into when updates are released and allow them to issue their own alerts and notifications to customers before and after subscriptions have expired. In the instant case, CCI accepted Microsoft’s clarification that this settlement had a global impact, leading to changes in Windows that were also implemented in versions released in India and remain available to users in the country.