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Microsoft is heading for a new antitrust showdown

Filed under
Microsoft
Legal

In July 2021, the UK government invited startups, businesses, and policymakers to a consultation about the most pressing competition problems in the tech industry, ahead of the launch of its new Digital Market Unit (DMU). One person familiar with the discussions says that something odd was happening behind closed doors. In private discussions entrepreneurs claimed Microsoft was behaving in a way they thought was detrimental to healthy competition; yet none dared to publicly call Microsoft out in the consultation.

Most startups complained about Microsoft’s tendency to “bundle” new features in its products that directly competed with the startups’ core creations. But the source says startup founders were too scared of Microsoft’s reaction to go public with their gripes. The founder of an enterprise software startup said that Microsoft would "absolutely kill" their business if they spoke out, the source claims– implying that they feared the tech giant would make their products incompatible with Microsoft’s software ecosystem.

The DMU consultation is slated to conclude on October 1 – whether any British startup will publicly denounce Microsoft is anyone’s guess.

The episode is indicative of an ongoing shift. While Microsoft has been largely absent from heated discussions about Big Tech’s anticompetitive practices for nearly a decade, new entrants are increasingly worried – if not necessarily vocal – about the company’s dominance in both the enterprise software and cloud domains. Regulators in the UK and Europe might soon start taking notice of that, too.

In the past, Microsoft’s tendency to bundle its software products – such as browsers and media players – together in a way that was considered damaging to competition was slapped down by the EU with multimillionaire fines. But since 2014, under the stewardship of CEO Satya Nadella, Microsoft has managed to pull off two great pivots. First, it swore off a software licence model in favour of Office 365’s cloud-based subscription-based model. Then it restyled itself as a tranquil benevolent actor, a far cry from both the second-wave tech giants routinely on the front pages of newspapers for data gluttony and fake news, and Microsoft’s own cutthroat reputation of yore. But several companies, especially in the less headline-grabbing b2b sector where Microsoft is king, think that it has not really changed.

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