Handelsblatt covers the dark side of Microsoft

Today Handelsblatt provided coverage of the ongoing anti-trust complaint by Nextcloud against Microsoft quoting Nextcloud CEO Frank Karlitschek, as part of a comprehensive exposé on the prominent American technology corporation. Progress on the anti-trust case, initiated in early 2021, has been seemingly stagnant. Notably, a similar case started by US based chat provider Slack witnessed advancements. Microsoft ‚voluntarily‘ ceased the bundling of Teams with Office to avert scrutiny from EU regulatory authorities. It is perplexing that the complaint lodged by 30 European tech enterprises against Microsoft seems to have garnered comparatively less attention and progress than the intra-tech giant dispute.

Continued focus on exploiting market power

Exploiting market power – success in the tech sector is still often based on making customers dependent on your own products, then selling them new services and in this way pushing competitors out of the market. Microsoft is no exception under Nadella.

Handelsblatt, describing one of the 5 key principles of how Microsoft does business

„Microsoft has learned a great deal from its conflicts with the EU and other authorities over the past 20 years,“ Karlitschek says.“Microsoft’s business practices are tougher than ever, but lobbying and PR work are also better than ever.“

Handelsblatt, quoting Frank Karlitschek, CEO of Nextcloud GmbH

Nextcloud and the other members of the coalition appreciate the resolution in the Slack case. It means one case of market abuse by bundling has been partially addressed. Unfortunately the reality is that not bundling Teams in Office is almost irrelevant as Teams is now shipped and prominently available in the task bar on a fresh Windows installation. As the Handelsblatt article points out, Microsoft continues to strengthen its position in the market, using the weight of their massive market share in the office space.

Microsoft will continue to cement its position in the economy in the coming years. In the cloud age, switching to a competing service is already difficult, and artificial intelligence is now being integrated into the entire Microsoft portfolio. Customer loyalty, known as “vendor lock-in” in IT jargon, is becoming ever stronger

Handelsblatt

Deeply integrating services like OneDrive and Teams in Office and Windows is a tactic that served Microsoft well in the 90’s during the fight with the Netscape browser. Similarly, users continue to be pushed to „sign in to their OneDrive account“. Given a Microsoft account creation is now mandatory on Windows installation, all users do indeed practically have such an account, even if they never even thought about it.

The head of IT at a German company reports that it is practically impossible for his organization to break away from Microsoft

Handelsblatt

This market dominance enables the extraction of significant financial gains from customers. At the moment, the list price of 365 E5 is around Eur 60, and Microsoft knows it has all the leverage it needs to increase this and further grow their profitability. As reported by Handelsblatt:

CFO Amy Hood exulted several times to analysts as to how the package would increase sales per user. In April, for example, the group imposed a surcharge of eleven percent for the Office 365 office software and the Microsoft 365 product package in order to „harmonize“ exchange rate fluctuations, as the official justification went.

Handelsblatt

AI as a multiplier

AI will bring the power of Microsoft to a new level, something they were aware off from an early stage. The multi-billion dollar investment in OpenAI gave Microsoft a strong leg up on the competition. Handelsblatt concludes their article thusly:

Nadella’s goal is all-encompassing AI assistants for every area of life: „My dream is that each of the eight billion people on earth can have an AI tutor, an AI doctor, a programmer, maybe a consultant.“

From Microsoft, of course – and maybe with the help of OpenAI. More mindset growth is hardly possible.

Handelsblatt

Indeed, owning everybody’s data to be able to train AI’s like ChatGPT gives Microsoft near unlimited power. Unfortunately we doubt the rest of society will benefit from the monopoly of this tech giant and it is regrettable that governments seem unable to do something about it.

We at Nextcloud believe there are solutions to these problems. With our Ethical AI rating system we’re beginning to explore a variety of solutions with AI intergrations that offer more transparency, choice, and data privacy by default.

If you want to learn more about our anti-trust case against Microsoft, see the microsite about the subject here.