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Nextcloud Forms European Coalition — Begins Antitrust Actions Against Microsoft

Nextcloud, The Document Foundation, FSFE, OnlyOffice, and 26 other organizations are pushing the EU and member states to end noncompetitive actions by Microsoft and others.

European Commission headquarters
The Berlaymont Building in Brussels, headquarters of the European Commission. EmDee, CC BY-SA 4.0, via Wikimedia Commons

A European coalition formed by Nextcloud is taking antitrust action against Microsoft like it’s 1999.

The Germany-based company behind the on-premises content collaboration platform that shares its name, has put together a coalition of 30 organizations to fight Microsoft on antitrust grounds.

“The 90s have just called and they see that nothing has changed,” Stefane Fermigier, founder and CEO of open source software vendor Abilian — a part of the coalition — said in a statement. “Microsoft’s anti-competitive practices remain a major concern for the competitiveness of the European software and cloud industry. As it has done in the past in similar cases, the European Commission must put an end to these practices.”

Déjà Vu All Over Again

This isn’t the first time Microsoft has been down this road. In 1999 Redmond faced antitrust action in the US that largely centered around its Internet Explorer web browser. Beginning with the Second Edition of Windows 95, the company had included the browser in the operating system without cost, which all but put the once dominant Netscape browser out of business.

Microsoft initially lost that case, with district court Judge Thomas Penfield Jackson ordering the company be split in two. The ruling was overturned on appeal, however, with Microsoft walking away relatively unscathed.

Microsoft hasn’t fared nearly as well in the European Union. In 2003, the EU ordered Microsoft to make Windows available both with and without Windows Media Player, and to make information available to enable competing software vendors to design software that worked well on Windows desktops and servers. In 2004, the EU ordered Microsoft to pay €497 million for its anti-competitive behavior, the largest fine the EU had levied at the time.

On the browser front, in 2009 Microsoft agreed to a settlement with the EU, in which it promised to include a “ballot box” screen in Windows that would allow users choose to use one of twelve popular browsers.

In that case, Microsoft quit including the choice in 2011 (at first claiming it was still there and then calling it a “technical error”) which resulted in an additional fine of €561 million being levied against the company.

What the Coalition Wants

This time the issue is the integration of Teams as a default application in Windows 11, along with Microsoft pushing One Drive for file storage in its software, especially in it’s browser based 365 family of apps.

“This is quite similar to what Microsoft did when it killed competition in the browser market, stopping nearly all browser innovation for over a decade,” Nextcloud’s founder and CEO said in a statement. “This kind of behavior is bad for the consumer, for the market and, of course, for local businesses in the EU. Together with the other members of the coalition, we are asking the antitrust authorities in Europe to enforce a level playing field, giving customers a free choice and to give competition a fair chance.”

Nextcloud points out that over the last several years, Microsoft’s, Google’s and Amazon’s combined share of the total European market has grown to 66%, with homegrown EU-based providers share dropping from 26% to 16%. That’s obviously not a trend Nextcloud and other coalition members want to see continue.

“The companies in this coalition say: this behavior is harming the IT industry and is limiting customer choice. We want government to take action and force Microsoft to allow for a level playing field,” the Nextcloud said.

The group’s demands are simple and twofold: “No gate keeping (by bundling, pre-installing or pushing Microsoft services) for a level playing field” and “Open standards and interoperability that make an easy migration possible. This gives consumers a free choice.”

The coalition said it’s approach is to take a two-pronged approach to push for regulation, which includes filing complaints with the European Union and with the governments of individual European countries.

“The European Directorate-General for Competition exists precisely for the purpose of preventing this kind of behavior and keeping the market competitive and equal for all players,” Nextcloud said. “In early 2021, Nextcloud GmbH filed an official complaint with the EU Directorate-General for Competition about the behavior of Microsoft. Nextcloud has also filed a similar complaint with the German anti-trust authorities and we are working with our coalition members in France to file a complaint there.”

The Coalition’s Members

Four NGOs (non-governmental organizations) are taking part in the effort to reel-in Microsoft and other de facto IT monopolies. They include European DIGITAL SME Alliance, which says it represents more than 45,000 small to medium sized enterprises in the EU; Free Software Foundation Europe, aligned with but totally independent from the US-based FSF; Euclidia (for “the European Cloud Industrial Alliance) made up of Euro-based SMEs active in the cloud industry; and The Document Foundation, the organization behind the LibreOffice productivity suite.

The businesses that have joined the coalition are all small to medium sized enterprises, many of which are not well known on this side of the Atlantic, although there are several that are relatively well known, especially within the open source community, in the US. In addition to Nextcloud, these include ECorp/Esolutions, the company behind the /e/ Google-free Android clone, and the office productivity suite, OnlyOffice.

“By embedding services like OneDrive, Teams, or parts of Office 365 in Windows, Microsoft is forcing customer choices and therefore harming the complete IT ecosystem in Europe,” Gaël Duval, founder and CEO of France-based ECorp/Esolutions, said in a statement. “Microsoft should compete on the merits of their solution, not pushing it down users throats with anti-competitive behaviors.”

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