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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 ..... gisters itself with Windows through MVI as providing real-time protection, Microsoft Defender will automatically disable its real-time protection functionality. The Commission further notes that OEMs are also permitted to pre-install alternative third-party antivirus software on desktops and laptops running Windows OS. Additionally, other OS providers, such as macOS and ChromeOS, also include built-in antivirus functionality in place. Therefore, in the absence of an element of compulsion or imposition, prima facie there appears to be no violation of Section 4(2)(a)(i) of the Act. Has Microsoft's conduct resulted in an impediment to technical and scientific development in the market for antivirus applications, thereby violating Section 4(2)(b)(ii) of the Act? - HELD THAT:- 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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. 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? - HELD THAT:- In response to the Informant's claim regarding Kaspersky Lab's antitrust complaints filed in 2016 with Russia's Federal Antimonopoly Service and in 2017 with the European Commission and the German Federal Cartel Office, alleging that Microsoft leveraged Windows 10 to promote its own antivirus software over third- party alternatives, 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 rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated. 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 their inability to function optimally. 5. The Informant identified three key challenges faced by third-party antivirus developers in competing with Microsoft's bundled antivirus software, Microsoft Defender: a) Antimalware application programming interface (API) Access: Third-party developers must sign the Antimalware API License and Listing Agreement to access Microsoft's Antimalware API, which allows compatibility with Windows OS. However, this agreement imposes compliance obligations on competitors without offering protective guarantees, rendering it one-sided and potentially anti-competitive. b) Entry into Windows OS: Competitors can only enter Windows OS v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 with only a one-week notice for OS updates, making it nearly impossible to ensure timely compatibility. These limitations render third-party antivirus software commercially unviable without MVI membership, effectively forcing developers to join the program to gain access, compatibility, and visibility in the Microsoft Store. 9. For the purpose of the present matter, the Informant has submitted that relevant markets should be considered as the 'market for Licensable Operating Systems (OSs) for desktops in India' and the 'market for Computer security (antivirus) software for Windows OS in India'. The Informant has further asserted that Microsoft enjoys a dominant position in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am 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 sought additional information and clarifications from Microsoft, which have since been received. The Commission considered the Information available on record including responses filed by Microsoft, in its ordinary meeting held on 08.01.2025 and decided to pass an appropriate order in due course. Submissions of Microsoft: 13. Before adverting to the issues arising out of the present Information, it would be appropriate to note, in brief, the submissions of Microsoft in its responses: 13.1 Microsoft Defender's integration within the Windows OS aligns with industry practices and ensures all users are protected at all times against evolving cyber threats. Additionally, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding 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 various provisions of Section 4 of the Act. For examining the allegations pertaining to the alleged abusive conduct of Microsoft under Section 4 of the Act, delineation of the relevant market and determination of the dominance of Microsoft, if any, in those markets is essential. Determination of Relevant Market and Dominance of Microsoft 15. As stated above, the Informant has proposed relevant markets as the 'market for Licensable Operating Systems (OSs) for desktops in India' and the 'market for Computer security (antivirus) software for Windows OS in India'. Microsoft in its submission has argued that Informant's narrower market definition fails to capture the full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 that Microsoft is dominant in this market and has leveraged such dominance to take advantage in another market i.e. 'market for Computer security (antivirus) software for Windows OS in India'. 20. The Commission notes that Computer security software, commonly called antivirus software, is designed to prevent, detect, and eliminate malware threats such as viruses, worms, spyware, and ransomware from computers, networks, and IT systems. It offers features such as automatic updates, email scanning, and protection against various malicious activities. While firewalls are essential for regulating network traffic and preventing unauthorized access, they are not substitutes for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crosoft'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. 'market for Licensable Operating Systems (OSs) for desktops/laptops in India'. Assessment of alleged abusive conduct 24. Based on the averments contained in the Information the Commission has identified four issues for determination. The issues and corresponding analysis of the Commission thereon are as under: Issue 1. Does the inclusion of Microsoft Defender with the Windows operating system constitute an imposition of an unfair condition by Microsoft, thereby violating Section 4(2)(a)(i) of the Act? 25. As per the submissions of the Informant, a user who does not wish to install the Microsoft Security Essentials but only Microsoft Windows does not have the option to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and is not hindered by alleged Microsoft practices. Furthermore, the Commission also notes from the submissions of Microsoft that it neither extracts nor has access to any technologically privileged information from other antivirus programs, including those participating in the MVI program. Thus, allegations against Microsoft in respect of any actual or potential impediment to technical and scientific development appear to be largely speculative and lack relevant proof of harm, and prima facie there appears to be no violation of Section 4(2)(b)(ii) of the Act. Issue-3 Does Microsoft's conduct of bundling its own security software, Microsoft Defender, with the Window ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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 antivirus application of their preference, either by downloading it from the internet or by accessing it through the Microsoft Store. This implies that users are not restricted to using Microsoft's built-in security software and can opt for alternative solutions from third-party providers. Furthermore, Microsoft has submitted that various other antivirus applications are pre-installed by OEMs on certain devices. These pre-installed applications are available for immediate use by consumers, offering them additional choices without requiring any additional effort on their part. Thus, the third condition does not appear to be fulfilled. 34. Lastly, as regards the fourth c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 submissions has stated that the purpose of the MVI program is to assist organizations in enhancing their security solutions on Windows by providing tools, resources, and knowledge to develop reliable and compatible security applications. The program grants access to specific cybersecurity APIs, enabling developers to register their applications for real-time protection and prevent malicious actors from disabling Microsoft Defender. However, MVI membership is not mandatory, as developers can create antivirus applications independently. Microsoft emphasizes that the program is a facilitative measure rather than a gatekeeping mechanism, ensuring high-security standards through cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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