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TMI Blog2025 (3) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... It has been submitted by the Informant that since 2015, when Microsoft released its Windows 10 OS edition, it was bundled with pre-installed antivirus software, Microsoft Defender. If any Original Equipment Manufacturer (OEM) wants to manufacture a Windows OS-based product, they must mandatorily bundle it with Microsoft Defender. 4. The Informant stated that starting with Windows 10, separate commercial arrangements to pre-install and pre-activate third-party antivirus software are no longer possible. As only one default antivirus app is allowed on Windows devices, third-party developers may get their software pre-installed through agreements but cannot have it pre-activated. Being set as the default is essential for an antivirus program's functionality, including performing automated background system scans-a core feature distinguishing antivirus software. Without default status, third-party apps lack access to critical features like real-time protection, on-demand scanning, and automatic updates, which are only available to the default antivirus app. Consequently, third-party antivirus apps may struggle to compete effectively and could face elimination from devices due to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged that Microsoft gains extensive telemetry and app usage data from MVI members, providing it with access to sensitive information on devices running Windows OS. Microsoft decides what data is shared with partners and allegedly uses this data to commercially exploit competitor applications. By analysing the success factors of popular competitor apps, Microsoft integrates those features into its bundled Microsoft Defender, thereby enhancing its own product and ensuring third-party antivirus software cannot effectively compete. This dynamic creates a significant disincentive for antivirus developers to join MVI, as it compromises their competitive position and proprietary information. 8. The Informant also submitted that non-MVI members face significant restrictions in accessing Windows OS, as they cannot use pre-installation or the Microsoft Store and are limited to user-initiated sideloading, which is hampered by disproportionate warnings and, in some cases, outright installation blocks by Microsoft. OEMs avoid pre-installing non- MVI antivirus apps due to their inability to function smoothly under Microsoft's restrictions. Additionally, Microsoft provides non-MVI developers wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpulsory in order to get listed in the Microsoft Store and work smoothly in Windows OS, thereby violating Section 4(2)(c) of the Act. 10.4 Microsoft is leveraging its dominance in the market for desktop operating system to protect its position in the market for security software/antivirus software developers in India, thereby violating Section 4(2) (e) of the Act. 11. The Informant has inter alia prayed to the Commission to direct Microsoft to cease the anti-competitive practice of bundling Microsoft Security Essentials with its desktop operating system and to ensure fair access for competing antivirus software developers by allowing their participation in the MVI program and making their antivirus solutions available to Windows desktop users. Consideration by the Commission 12. The Commission considered the Information in its ordinary meeting held on 24.04.2024 and decided to forward a copy of the non-confidential version of the Information to the OPs to seek a response from them and, the Informant was also allowed to file its rejoinder, if any, to such reply of OPs. While Microsoft submitted its reply, no rejoinder was filed by the Informant. Subsequently, the Commission sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plications to register with Windows as providers of real-time protection. When activated, these applications disable Microsoft Defender automatically, ensuring seamless user experience. To prevent misuse, Microsoft manages API access through the MVI program, safeguarding against malicious applications that could disable Defender and compromise systems. The program ensures transparency by consistently applying and publishing membership criteria. Additionally, MVI offers developers technical resources, tools, prerelease Windows access, and testing programs to meet security standards. Importantly, third-party applications maintain control over their commercial features, including user notifications for subscription renewals. 13.7 Microsoft cannot and does not extract technologically privileged information from other antivirus programs, even if they are part of the MVI program. The only information Microsoft can access is publicly available data that anyone can obtain by downloading the app. Analysis 14. The grievances of the Informant primarily relate to alleged abuse of dominant position by OPs by way of bundling and tying its antivirus product in Windows OS, thereby violating va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies: licensable and non-licensable. Licensable operating systems are those that the developer or owner makes available for use by others, either for free or for a licensing fee. Examples include Microsoft Windows and Linux. On the other hand, non- licensable operating systems, such as Apple's macOS, are not offered for licensing by their owners and, therefore, cannot be used by third-party manufacturers such as Dell or HP. Since non-licensable operating systems are not available to third-party device makers, they do not compete in the same market as licensable operating systems. Taking into consideration these features and the different parameters cited supra, the Commission delineates the first relevant product market as 'market for Licensable Operating Systems (Oss) for desktops/laptops. 18. As regards the geographic market, the Commission notes that since conditions for competition are homogenous in India, the geographic area of India has to be taken as the relevant geographic market for the purposes of assessment. Accordingly, the first relevant market would be the 'market for Licensable Operating Systems (OSs) for desktops/laptops in India '. 19. The Informant has alleged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the market share data provided above by Microsoft is in the context of much broader market segments which also include smart phone and tablets in addition to desktops/laptops. 23. The Commission notes from Microsoft's submission dated 10.12.2024 that the company's Windows OS holds an average market share of 70% in the licensable operating systems (OS) market for desktops and laptops in India, based on page views, during the calendar years 2021-2024. Additionally, the top five PC manufacturers in India-HP Inc., Dell Technologies, Lenovo, Acer Group, and Asus-rely on the licensable Windows OS and collectively account for 85% of the market share. Furthermore, Microsoft's significant presence across various segments of the computer system value chain, including operating systems, productivity software (e.g., Word, Excel, PowerPoint, and Outlook), hardware (such as Surface devices and Xbox consoles), and cloud services, provides it with a considerable advantage in the market. Therefore, based on market share, dependence of consumers, and vertical integration of the enterprise, the Commission prima facie finds Microsoft to be dominant in the first relevant market i.e. 'm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that Microsoft has illegally hindered the development and market access of rival security software developers by tying and bundling its own security software, Microsoft Defender with the Windows Operating System, thereby violating Section 4(2)(b)(ii) of the Act. 29. The Commission notes that the Informant has not provided any evidence to substantiate that there has been any actual or potential impediment to technical and scientific development on account of Microsoft's practices. Additionally, the Commission observes that there are many developers of antivirus software, and each of these providers routinely introduce new features and enhance their offerings to provide better services to customers. This ongoing innovation in the sector indicates that Microsoft's inclusion of Defender has not stifled technological advancement or deterred competition. Moreover, the submissions made by Microsoft further reinforce this view, as they indicate that other operating system providers are also consistently developing and rolling out new security features, updates, and performance enhancements. This suggests that technological progress in the cybersecurity and OS sectors remains dynamic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission does not agree with Microsoft's integrative approach, which suggests that Microsoft Defender is merely a core security feature of Windows OS. The Commission highlights that there are independent manufacturers specializing in the development of antivirus software, indicating a separate consumer demand and, therefore, a distinct market for antivirus solutions. Furthermore, the Commission has already determined prima facie that Microsoft holds a dominant position in the 'market for computer security (antivirus) software for Windows OS in India'. Given this, the first two conditions for anti-competitive tying-(i) the existence of two separate products and (ii) dominance in the tying product market (Windows OS) appear to be met in this case. 33. On the third condition, i.e. whether there is any compulsion/coercion on the users to necessarily purchase/use the tied product to use the tying product, the Commission observes that Microsoft has submitted that there has been no anti-competitive tying in the present case as there is no element of 'coercion' for the two products to be purchased or used together. According to Microsoft, users retain the autonomy to install and use any an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll and use third-party antivirus applications of their preference, without any technical or contractual barriers preventing them from doing so. Additionally, the cybersecurity market remains highly competitive, with several established players actively operating and offering a range of antivirus solutions. Therefore, in the absence of compelling evidence of restrictive practices, the allegation that Microsoft has leveraged its dominance in the operating system market to protect its position in the computer security software market, in violation of Section 4(2)(e) of the Act, does not appear to be substantiated. Issue 5: Has Microsoft restricted the development and market access of rival security software developers by making MVI membership a mandatory requirement for listing in the Microsoft Store thereby violating Section 4(2)(c) of the Act? 37. The Informant has alleged that Microsoft has illegally hindered the development of and denied market access to rival security software developers by making membership of MVI compulsory in order to get listed in the Microsoft Store and work smoothly in Windows OS, thereby violating Section 4(2)(c) of the Act. 38. Microsoft in its submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Microsoft stated that it reached a settlement agreement with Kaspersky in 2017. Microsoft further clarified that the settlement had a global impact, leading to changes in Windows that were also implemented in versions released in India and remain available to users in the country. 41. Based on the aforesaid, the Commission does not find alleged contravention of the provisions of Section 4 of the Act against Microsoft being made out. In view of the foregoing, the Commission is of the opinion that there exists no prima facie case of contravention and the information filed is directed to be closed under Section 26(2) of the Act. 42. Before parting with the order, the Commission deems it appropriate to address the requests for confidentiality filed by parties under Regulation 35 of the General Regulations, 2009 (as amended). The Informant has sought confidentiality over its identity and certain documents/information submitted in the proceedings. Similarly, Microsoft has requested confidentiality concerning specific documents, data, and information filed by them. Considering the grounds put forth by the parties for the grant of confidential treatment, the Commission grants confidenti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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