CCI Clears Microsoft: No Abuse of Dominance in Windows Defender Case

The Competition Commission of India (CCI) has dismissed allegations of anti-competitive conduct against Microsoft in Case No. 03 of 2024, ruling that its practices did not violate Section 4 of the Competition Act, 2002.

Allegations Against Microsoft

An anonymous Informant alleged that Microsoft abused its dominant position in the market by:

• Pre-installing and pre-activating Microsoft Defender on Windows OS, restricting third-party antivirus developers from being the default security solution.
• Requiring antivirus developers to join Microsoft’s Virus Initiative (MVI) for full access to Windows security APIs, potentially exposing competitors' data to Microsoft.
• Tying and bundling Microsoft Defender with Windows OS, foreclosing competition in the antivirus market.
• Leveraging its dominance in OS to gain an unfair advantage in the cybersecurity software industry.

Microsoft’s Dominance in the Market

The CCI identified two relevant markets:

1. Licensable Operating Systems for desktops/laptops in India, where Microsoft holds a 70% market share, establishing its dominance.
2. Computer security (antivirus) software for Windows OS in India, where Microsoft Defender is installed on 100% of Windows OS devices, making it a major player.

Key Issues Considered by the CCI

The CCI framed five questions:

1. Did bundling Microsoft Defender with Windows impose unfair conditions on users?
2. Did Microsoft hinder innovation in the antivirus industry?
3. Was there an illegal tying arrangement between Windows OS and Defender?
4. Did Microsoft leverage its OS dominance to restrict competition in antivirus software?
5. Did Microsoft’s MVI membership requirement deny market access to competitors?

CCI’s Observations and Decision

?? No Unfair Conditions on Users – Microsoft does not prevent users from installing third-party antivirus software. If an alternative antivirus is registered with Windows, Defender automatically disables its real-time protection.

?? No Hindrance to Innovation – The cybersecurity market remains competitive, with firms like McAfee, Symantec, Norton, and Bitdefender continuing to innovate and operate effectively. No evidence showed that Microsoft’s practices restricted technical advancements.

?? No Illegal Tying Arrangement – The CCI rejected the claim that Microsoft tied Defender to Windows OS to foreclose competition. The Commission ruled that Defender is a built-in security feature, not a separate product, and users can freely install alternatives.

?? No Abuse of Dominance – While Microsoft is dominant in the OS market, the CCI found no evidence that it leveraged this dominance to unfairly eliminate antivirus competitors. Several cybersecurity firms remain active, and no foreclosure of competition was observed.

?? MVI Program is Not Anti-Competitive – The MVI program was deemed voluntary and designed to ensure compatibility and security compliance. Non-MVI members could still distribute antivirus software through independent channels, though with some limitations.

Final Verdict

The CCI closed the case under Section 26(2) of the Competition Act, concluding that Microsoft’s conduct did not violate competition law. Both the Informant’s identity and sensitive company data were granted confidentiality.

The copy of the order can be found here.