Microsoft has become part of a select group of tech companies subject to special abuse control regulations in Germany. On Monday, the Federal Cartel Office (FCO) confirmed that the software giant could face restrictions if necessary, based on the authority's assessment.
This designation, lasting five years, allows German regulators to closely monitor Microsoft's influence, particularly in relation to its generative AI activities. However, no decisions have been made regarding possible actions.
In recent years, Microsoft’s involvement with OpenAI has drawn attention from antitrust authorities. The close relationship between the two led to Microsoft briefly hiring OpenAI’s CEO, Sam Altman, and other staff during a dispute last fall, although Altman ultimately remained with OpenAI. Microsoft also secured a board observer position at OpenAI, which it gave up this summer. Their structured partnership has so far avoided regulatory intervention.
The FCO has already reviewed this partnership and concluded last November that it did not meet the criteria for a formal merger review. Now, with the FCO's broader powers to regulate Big Tech, Microsoft's activities, especially with OpenAI, could face more scrutiny in Germany.
The FCO's press release emphasized the extensive use of Microsoft's Copilot AI assistant across its ecosystem. It also noted the company's strong presence in cloud computing, which has enabled partnerships with innovative suppliers by offering their AI models through Azure and integrating them into Microsoft products.
Andreas Mundt, president of the FCO, highlighted Microsoft’s long-standing dominance in software, stating that the company's ecosystem is now more interconnected due to its focus on cloud and AI technologies. These have strengthened Microsoft's market position through both product development and strategic collaborations.
The FCO started investigating Microsoft’s market power in March 2023. This new designation, recognizing Microsoft’s "paramount significance for competition across markets," unlocks various powers from Germany’s 2021 antitrust reforms, aimed at curbing Big Tech’s dominance and fostering competition.
Other tech giants like Amazon, Apple, Google, and Meta are already under similar regulations in Germany. These rules precede the EU's Digital Markets Act (DMA), which also targets large tech companies, though the DMA’s controls apply only to specific platforms. In contrast, the FCO's designation covers Microsoft as a whole, allowing more extensive oversight of its activities, including AI, where necessary.
While the EU’s DMA was drafted before the rise of generative AI tools like ChatGPT, Microsoft's designation under the DMA only applies to two platforms: Windows and LinkedIn. This limits the European Commission's ability to regulate Microsoft’s AI operations unless tied to these platforms.
Mundt emphasized that the FCO’s decision applies to all of Microsoft’s operations, not just individual services. This gives the FCO broader power to address anti-competitive practices outside the DMA’s scope.
Responding to the FCO’s decision, Microsoft spokesperson Robin Koch acknowledged the company’s responsibility to support competition and expressed a commitment to working with the FCO, partnering with Germany’s most innovative companies, and investing in the country's digital economy.
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