CCI Dismisses Antitrust Complaint Against Microsoft For Bundling Antivirus

The Competition Commission of India (CCI) has dismissed an antitrust complaint filed against Microsoft alleging that the big tech major is abusing its dominance in the desktop operating system (OS) market by bundling its Microsoft Defender antivirus with its Windows OS.

“… 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,” read the CCI order. 

The complaint, filed by an unnamed informant, claimed that Microsoft’s practice of pre-installing and pre-activating Microsoft Defender in Windows OS impacts third-party antivirus providers. 

As such, the informant sought directions to the big tech major to cease the bundling practice to ensure “fair access for competing” antivirus software developers. Here is what the complainant alleged in his complaint:

• Microsoft has excluded potentially more efficient competing antivirus software vendors in India by preinstalling and pre-activating Microsoft Defender as default antivirus app in Windows OS
• Microsoft has illegally hindered the development and market access of rival security software developers by tying and bundling its own security software
• Microsoft has illegally denied market access to rivals by making membership of Microsoft Virus Initiative (MVI) compulsory in order to get listed in the Microsoft Store and work smoothly in Windows OS
• Microsoft is leveraging its dominance in the market for desktop OS to protect its position in the market for security software

Responding to the allegations, Microsoft claimed that the integration of its antivirus in Windows OS aligns with industry practices and ensures “all users are protected at all times against evolving cyber threats”. The company also argued that the antivirus solutions market has multiple players and robust competition, thereby rendering the complaint moot. 

Microsoft also contended that its antivirus is free and not sold separately, adding that Microsoft Defender would automatically be disabled if a user installs a third-party app which complies with its MVI programme. It added that a user can also install a non-MVI antivirus software, but such a solution would run in “parallel” with Microsoft Defender.

“OEMs (original equipment manufacturers) are allowed to pre-install alternative third-party antivirus software on desktops and laptops running Windows OS. The pre-installed antivirus must be of high quality to ensure adequate user protection, and MVI membership serves as a reliable indicator of the software’s quality,” Microsoft argued before the CCI. 

After hearing both sides, the CCI observed that there is no “compulsion” on Microsoft users to exclusively use Defender as their antivirus solution and customers are free to install any third-party antivirus software of their choice.

“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,” read the CCI order. 

The Commission also noted that the informant did not provide any evidence to substantiate claims that there are potential impediments to technical and scientific development on account of Microsoft’s practices. 

However, the CCI also underlined that Microsoft met two of the four pre-requisities for anti-competitive “tying” (bundling), namely the existence of two separate products (the tying and tied products are two separate products) and the dominance in the tying product market (Windows OS). 

With regards to the third condition of whether there is any compulsion on the users to necessarily use the tied product (Defender) to use the tying product and the fourth condition of whether the tying is capable of restricting competition in the market, the Commission ruled against the complainant. 

“As noted in the OP’s (opposing party or Microsoft) submission, the MVI program is designed to support organisations in improving their security solutions on Windows by providing necessary tools, resources, and knowledge to develop effective, reliable, and compatible products. Thus, Microsoft may pursue its legitimate interest by prescribing certain reasonable compatibility requirements and thereby not appear to be in violation of Section 4(2)(c) of the Act,” added the CCI. 

With this, Microsoft appears to have, for now, skipped the CCI’s tightening noose on big tech giants. In November last year, the Commission imposed a penalty of INR 213 Cr on social media giant Meta for abusing its dominant position in connection with the 2021 WhatsApp privacy policy case. 

Prior to that, the CCI slapped two separate penalties, totalling INR 2,274.2 Cr, on Google in 2022 for alleged abuse of dominance in the Android devices market and with regards to its Play Store policies.