Exclusive: New anti-trust complaint looms over Microsoft

Leading security software producers shared their frustrations about Microsoft, as leading Russian security software company Kaspersky is drafting an official anti-trust behavior complaint to submit to the European Commission.

A high-level EU official from DG Competition, who had worked on the Microsoft anti-trust case brought forward by the EU Commission in 1998, said that at least three security software companies “met several times” with the European Commission about Microsoft’s alleged abuse market position as supplier.

Shared memos, meetings in Brussels and phone calls between the complaining software companies and the EC intensified after Microsoft launched Windows 10 in October 2014. The exchanges are still ongoing, as the complainers expect that the EC will eventually take action.

One security software major player, Kaspersky, is formalizing its grievance over Microsoft’s debated violation of the European Union’s competition rules.

The dispute targets Microsoft’s free security software add-on, Defender: included by default in the new Microsoft’s operative system, it shrinks the market for Defender’s competitors.

“We have made the decision to bring this case to the European Commission and are currently preparing the application”, a Kaspersky Labs’ spokesperson told Investigate Europe. 

Defender is an anti-malware / virus application that, according to the complaints of other software producers, “crashes competition” by being installed for free for Windows buyers.

If and when the European Commission Directorate-General for Competition receives the complaint, it will have to decide if it opens a formal procedure. Back in 2012, Microsoft lost the anti-trust case brought against the company by the European Commission’s competition watchdog in 1998.

Other software companies contacted by Investigate Europe are lobbying the European Commission to address Microsoft’s competition tactics. Some of them are considering pressing similar complaints, but have not mustered yet the courage because of the high costs such a case could bring and the time it would take to solve it.

In one “confidential memo” sent to DG Comp in Brussels last year, one security software supplier complains that Microsoft has broadened its definition of Microsoft Windows operating system to distribute other Microsoft Software.

“Microsoft is in fact extending the concept of the Operative System to any other software that Microsoft produces or will produce in the future, in order to leverage or ‘piggyback’ on the ubiquity of Windows and other popular Microsoft software,” it said.

The memo claims that Microsoft is “taking an artificial distribution advantage versus other competitors, an advantage which is not related to the merits of the software products themselves. In summary, for Microsoft, any Microsoft software can or will be made or ‘presented as’ a component of Windows.”

The DG Comp official said the Commission was “aware” of Microsoft competition tactics: “Microsoft is abusing its dominant position” to fetch contracts.

“Because our current focus is on Google, but also because of our way of acting, we’re waiting for a formal complaint from a competitor in order to have a stronger position.”

In practice however, the Commission does not have to open any formal infringement procedure “even if it considers a breach has occurred”, according to EC’s rules.

“Anti-trust complaints are expensive and take too long”, a spokesperson from another European security software company told Investigate Europe. Speaking under anonymity, he said that their company prefers to dialogue with the Directorate-General for Competition over the issue, rather than accuse Microsoft of anti-competition practices given the costs of a trial.

Yevgeny Kaspersky, the 52 year old CEO of the Russian security software company, wrote on his blog in November last year: “We think that Microsoft has been using its dominating position in the market of operating systems to create competitive advantages for its own product.”

“The company is foisting its Defender on the user, which isn’t beneficial from the point of view of protection of a computer against cyber-attacks. The company is also creating obstacles for companies to access the market, and infringes upon the interests of independent developers of security products.”

The same argument has been presented to DG Comp by another company that has also asked to remain anonymous.

“From a security perspective, it can actually be risky to have Microsoft aggressively pushing, exclusively, its own anti-malware product because of the monoculture risk.

In November 2016, following a complaint from Kaspersky, the Russian antitrust authority opened a formal investigation targeting Microsoft.

Kaspersky’s general director Igor Chekunov was quoted by the Russian press to launch clear accusations against the U.S. software giant’s strategies: “Microsoft has created a situation in which competing antivirus producers, including Kaspersky Lab, are unable to completely fulfill their obligations to customers, which leaves the latter helpless, limits their choices and leads to third-party producers incurring financial losses.”

The EU official said that the Commission had met software security companies several times, and that they were “very angry” about Microsoft’s practices.  “A formal complaint could soon arrive from there.”

Microsoft Europe did not wish to comment.

Versions of this article have been published on thursday, 6th of April 2017,  by British Computer Weekly, Belgian EUObserver, German Tagesspiegel, Swiss Handelszeitung and Portuguese Publico