Microsoft has joined the ranks of just a few industry giants in Germany that are placed under a special abuse control regime. Confirmation came Monday when the Federal Cartel Office said such curbs could be imposed on the software giant if the competition authority decided an intervention was warranted.
The designation is valid for five years and becomes important because it will allow the German authority to have full scrutiny over the influence of Microsoft through its engagements in generative AI.
However, the regulator said no decisions have been taken as yet on “potential proceedings.”. 
More recently, Microsoft’s dominance over OpenAI has drawn the interest of antitrust regulators. The close-knit relationship even saw Microsoft briefly hire OpenAI’s star chief, Sam Altman, as well as other crucial staff, last fall during a spat with its board.
Though Altman ultimately remained at OpenAI, the drama highlighted the deep ties between the two companies—Microsoft had even held a board observer seat at OpenAI, which it relinquished last summer. But the exacting management of its relationship seems to have kept the snowball rolling for the time being, at least.
The FCO had earlier examined the partnership between the two companies and, in November last year, ruled that the relationship did not meet the threshold for a standard merger review. Equipped with new, broader-reaching authorities to rein in Big Tech, Microsoft’s dealings with OpenAI are likely to get a closer look from the regulator in Germany going forward.
The FCO press release focusses on the integration of Microsoft’s Copilot AI assistant across segments of its ecosystem. Strong capabilities in cloud computing make it easier for the company to forge partnerships with highly innovative suppliers, offering their AI models as services on Azure and baking them smoothly into its own product offerings.
The head of the FCO, Andreas Mundt, said in a recent statement: “Today, Microsoft’s ecosystem is more powerful and tight than ever, driven by increasing dependence on cloud computing and AI technologies, at the heart of which Microsoft has entrenched its dominance by developing proprietary products and forging strategic partnerships.”
In March 2023, the FCO launched a probe into whether the market power of the tech giant equalled special abuse controls. The recognition of the paramount significance for competition across the markets now triggers a range of powers created under the 2021 reform of Germany’s antitrust law. The reform seeks to tackle concerns that the market dominance of Big Tech is suppressing the attempts of competitors to innovate and compete effectively.
The German law already applies to Amazon, Apple, Google, and Meta. It predates the European Union’s Digital Markets Act, or DMA, a similar ex-ante competitive reform to rein in the powers of Big Tech.
The DMA, however, imposes upon the operational controls of the designated platforms, while the FCO classified Microsoft as a whole. This, in essence, gave the German government greater powers in implementing regulations for the operations of Microsoft, specifically on AI, if it perceives that its actions are against the best competitive practices.
The DMA of the EU was draughted before the explosion of generative AI tools catapulted ChatGPT into mass popularity. Microsoft was declared a gatekeeper, but only two of its platforms fell directly under the regulations: the Windows operating system and the social network LinkedIn. This reduces the leeway for the Commission to involve itself with Microsoft’s AI activities, unless those activities have been clearly differentiated under the two defined “core platform services.”
He added, “Our decision covers Microsoft as a whole, rather than just focussing on individual services or products.” The Commission reportedly said: “Given our decision, we can ban anti-competitive practices extending beyond the scope of the DMA.
