Microsoft under fire in Europe for OneDrive bundling; legal fight brewing

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File-hosting service provider Nextcloud, backed by 29 other European companies, has filed a complaint with the European Union and German antitrust authorities against Microsoft for what it’s calling anti-competitive behavior related to the OneDrive cloud storage offering.

In the complaint, Germany-based Nextcloud told the European Commission (EC) that Microsoft is aggressively bundling its OneDrive cloud, Teams, and other services with Windows 10 and 11.

Lead by Nextcloud, a coalition of European Union (EU) software and cloud organizations and companies formed the “Coalition for a Level Playing Field.”

“Microsoft’s combination of the dominant Windows (operating software) with the OneDrive (cloud) offering makes it nearly impossible to compete with their SaaS services,” Nextcloud said in a blog post. “It illustrates anti-competitive practices such as ‘self-preferencing’ on the basis of the market dominance of Windows.”

Frank Karlitschek, CEO and founder of Nextcloud, also pointed out in his blog that over the last several years, Microsoft, Google, and Amazon have grown their market shares to 66% of the total European market, while local European software and service providers have declined from 26% to 16%.

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“Behavior as described above is at the core of this dramatic level of growth of the global tech giants in Europe,” Karlitschek said. “This should be addressed without any further delay.”

“There are deliberate, abusive practices and those practices are no accidents. Other Big Tech firms are showing similar conduct. The European Commission should take a position in this context,” Nextcloud said. “The cloud services market is generally recognized to be of strategic importance to the development of the overall digital sector in the EU.”

A Microsoft spokesperson said in an email response to Computerworld that the company makes “it easy for people to select and use other storage options instead of or in addition to OneDrive, and many people do.

“People expect modern operating systems to provide secure and reliable cloud storage functionality whether they’re using a computer, tablet, or phone from any provider,” the spokesperson said. “This enables people to access their files from multiple devices and keeps documents and photos safe if a device breaks.”

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Nextcloud is demanding the EU stop Microsoft from “gate keeping” by bundling, pre-installing, or pushing Microsoft services for a level playing field. It also asked the EU commission to support open standards and interoperability that make an easy migration possible.

“This gives consumers a free choice,” the group said on its Coalition for a Level Playing Field website. “We want government to take action and force Microsoft to allow for a level playing field.”

This is not the first time Microsoft has been accused of anti-competitive practices in recent months.

In June, Slack filed an anti-trust complaint with the European Commission arguing  that Microsoft illegally tied its Teams offering into its market-dominant Office productivity suite, which forced millions to install it. It also claimed Microsoft’s software blocked its removal, and hid “the true cost to enterprise customers.”

“Slack simply wants fair competition and a level playing field. Healthy competition drives innovation and creates the best products and the most choice for customers,” Slack said in a statement at the time.

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Nextcloud also pointed out in its post that the current anti-competitive behavior by Microsoft is what happened in the late 1990s when Microsoft bundled Internet Explorer with Windows “thereby destroying Netscape.”

The Document Foundation, home to free and open-source office productivity suite LibreOffice, is among the 29 European organizations that joined Nextcloud in its complaint.

Lothar Becker, chairman of the board for The Document Foundation, said in a statement that European citizens should be able to decide for 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,” the company stated. “We support the complaint about this anti-competitive behavior and urge the EU to take action immediately.”

Copyright © 2021 IDG Communications, Inc.

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