EU companies issue formal complaint against Microsoft OneDrive Windows integration

Nextcloud and almost 30 other European companies have filed a complaint about Microsoft's anti-competitive behavior with its OneDrive cloud storage offering.

Remember how Microsoft spent years in hot water in the late '90s and early '00s by forcing Internet Explorer on its customers? European open-source cloud company Nextcloud does. 

Now, with a coalition of other European Union (EU) software and cloud organizations and companies called the "Coalition for a Level Playing Field," Nextcloud has formally complained to the European Commission (EC) about Microsoft's anti-competitive behavior by aggressively bundling its OneDrive cloud, Teams, and other services with Windows 10 and 11.

Nextcloud claims that by pushing consumers to sign up and hand over their data to Microsoft, the Windows giant limits consumer choice and creates an unfair barrier for other companies offering competing services.

Specifically, Microsoft has grown its EU market share to 66%, while local providers' market share declined from 26% to 16%. Microsoft has done this not by any technical advantage or sales benefits but by heavily favoring its own products and services, self-preferencing over other services. While self-preferencing is not illegal per se under EU competition laws, if a company abuses its dominant market position, it can break the law. 

Nextcloud states that Microsoft has outright blocked other cloud service vendors by leveraging its position as gatekeeper to extend its reach in neighboring markets, pushing users deeper into its ecosystems. Thus, more specialized EU companies can't compete on merit, as the key to success is not a good product but the ability to distort competition and block market access.

Frank Karlitschek, Nextloud's CEO and founder, goes so far as to say: 

This is quite similar to what Microsoft did when it killed the competition in the browser market, stopping nearly all browser innovations for over a decade. Copy an innovators' product, bundle it with your own dominant product, and kill their business, then stop innovating. This kind of behavior is bad for the consumer, for the market, and, of course, for local businesses in the EU. 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 giving the competition a fair chance.

Nextcloud is not the only company to make such complaints. Slack has filed an antitrust complaint against Microsoft in the European Union (EU) about Microsoft's integrating Teams with Office. This case is now proceeding.

So, Nextcloud is asking the European Commission's Directorate-General for Competition to prevent this kind of abusive behavior and keep the market competitive and fair for all players. Nextcloud is doing this by filing an official complaint with this body. In addition, Nextcloud has also filed a request with the German antitrust authorities, the Bundeskartellamt, for an investigation against Microsoft. With its partners, it's also discussing filing a similar complaint in France.

Nextcloud is being joined in its complaint by several open-source, non-profit organizations. These include the European DIGITAL SME Alliance; the Document Foundation, LibreOffice's backing organization; and the Free Software Foundation Europe (FSFE).

Lothar Becker, the Document Foundation chairman, said, "European citizens should be able to decide by themselves about the digital tools they use to create, store and share contents, including an open document format for their files. Big Tech's actions, based on their monopoly power in the operating system area, force consumers to use proprietary software, thus reducing their freedom and digital rights. We support the complaint about this anti-competitive behavior and urge the EU to take action immediately."

Heiki Lõhmus, the FSFE's VP, added, "Proprietary "Software as a Service" offers seriously threaten the freedom of European computer users and their ability to maintain effective control over their devices and data... We will continue to support them to ensure that markets remain fair and proprietary competitors do not engage in illegal anti-competitive efforts to snuff out competitors who empower their users."

Numerous businesses are also supporting Nextcloud's legal action. This includes Abilian, an open-source software publisher; DAASI, an open-source identity management company; and Mailfence.

Stefane Fermigier, founder and CEO, frankly doesn't think that the Microsoft leopard has changed its spots no matter how much Microsoft now says that it loves Linux. Fermigier explained, "The '90s have just called, and they see that nothing has changed. Microsoft's anti-competitive practices remain a major concern for the competitiveness of the European software and cloud industry. As it has done in the past in similar cases, the European Commission must put an end to these practices."

Therefore, Nextcloud and its allies are asking the European Commission to ensure that there is:

No abuse of Microsoft's dominant position in the OS and related markets (e.g. by bundling, pre-installing, or leveraging additional Microsoft services) while preserving a level playing field. 

And that Microsoft must support open standards and interoperability. This would give European consumers a free choice among service offerings that should compete fairly on their merits. 

Will this effort come to anything? Stay tuned. The EC has in the past, as Google can attest, ruled that American companies have engaged in anti-competitive behavior in the EU. 

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