Germany’s antitrust watchdog has launched a probe into Microsoft to assess its power in the market, in a move that could presage a regulatory crackdown against the US tech giant.

The federal cartel office, or Bundeskartellamt, on Tuesday said it would examine whether Microsoft should be designated of “paramount significance for competition across markets”. 

The action is being launched under Section 19a of the German Competition Act, a law that places Berlin at the vanguard of European attempts to restrict the power of Big Tech.

The law, which came into force in January 2021, gives Germany’s antitrust authorities powers to go after so-called gatekeepers such as Meta, Google and Amazon, including the ability to impose sanctions like forced divestments against companies and even break them up.

“Such a finding would allow us to take action at an early stage and prohibit possible anti-competitive practices”, said Andreas Mundt, head of the agency.

The investigation comes with Microsoft already under intense scrutiny from regulators in the US, the UK and the EU over its attempt to acquire gaming company Activision, owner of the popular game Call of Duty. However, recent provisional findings in the UK and the EU have narrowed their concerns.

The German probe is the first step in a two-stage process and does not yet entail an assessment of Microsoft’s business practices, said the Bundeskartellamt.

It said if there were any indications of Microsoft engaging in potentially anti-competitive practices, a “separate decision will have to be issued in this matter — also in consultation with the European Commission and possibly other competition authorities”.

Regulators in Germany argue that Section 19a is years ahead of the EU’s landmark piece of antitrust legislation, the Digital Markets Act, and with the potential to capture even more illegal conduct by being less prescriptive on what constitutes anti-competitive behaviour.

Since the law came into force, the Bundeskartellamt has determined that Google-parent Alphabet, Meta and Amazon are of paramount significance for competition across markets. Amazon has appealed against the finding.

Mundt noted Microsoft’s “very strong position” in operating systems and office software, the growing importance of its cloud services Azure and OneDrive, “which are often linked to other Microsoft applications”, and the “resounding success” of Teams, its videoconferencing software.

He also alluded to its Xbox gaming console, the LinkedIn platform, its Bing search engine and its AI applications, which it had recently integrated.

The Bundeskartellamt said a company could be found to have “paramount significance for competition across markets” if it has created a “digital ecosystem which extends across various markets”.

Microsoft said it was “mindful of our heightened responsibility to support a healthy competitive environment” and added that it “will engage constructively with the Bundeskartellamt as they seek to understand our role in digital markets”.

If companies are ruled to be of “paramount significance for competition across markets”, then the regulator can prohibit them from engaging in potentially anti-competitive practices — such as ranking their own services ahead of rivals, denying rivals access to data and preventing users from taking their own data to other competing services.

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