Slack now has to show Microsoft is behaving badly

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When the heads of the largest US tech firms seem at a landmark antitrust listening to in Washington subsequent Monday, there will likely be a notable absence: Satya Nadella, CEO of Microsoft, won’t be amongst them.

Shopper applied sciences like iPhones, social networks and search engines like google will come underneath the microscope, however the world of enterprise software program will get a go.

That an organization value an astounding $1.6tn has not been swept up within the antitrust worries about Huge Tech is partly a matter of optics. Surprisingly, given its wealth, Microsoft has come to be seen as an underdog, lagging Amazon within the all-important cloud computing market.

In contrast to Amazon, although, it occupies all components of what’s generally known as the know-how “stack” — the layers of tech that stretch from the fundamental bodily infrastructure and working methods that make up the foundations of IT, up by means of providers like databases, to the functions that run on high. That provides it extra scope to tie components of the know-how collectively, growing gross sales.

Microsoft has additionally finished a very good job of burying its previous picture as a convicted monopolist. Brad Smith, the corporate’s president, made a bid for the ethical excessive floor final month by attacking the 30 per cent price Apple takes by means of its App Retailer. He recommended that even Microsoft on the peak of its energy 20 years in the past was not such an influential gatekeeper — although, with its failed bid to show a know-how referred to as Passport right into a broad platform for shopper providers on high of Home windows, it actually tried.

It was in all probability inevitable, nonetheless, that Microsoft would ultimately be dragged into the fray. It occurred this week when Slack, the office messaging service, made a proper grievance to the European Fee. By together with the rival Groups service freed from cost in its extensively used Workplace software program, Slack charged Microsoft with appearing illegally to squeeze it out of a brand new market.

Mr Nadella has rejected Slack’s complaints, telling the FT not too long ago that the start-up owes its very existence to having the ability to distribute freely on Microsoft’s Home windows. However what Microsoft offers with one hand, it takes away with the opposite. From the early days of the PC, when it displaced the pioneering Lotus 1-2-Three spreadsheet with its personal rival software program, Microsoft has been adept at proudly owning crucial office instruments that run on its platforms.

Slack has aligned itself extra carefully with Amazon, trying to connect with a few of that firm’s cloud providers © Andrew Harrer/Bloomberg

Slack just isn’t the one firm within the line of fireside. Final yr, Microsoft folded Skype for Enterprise into Groups, within the course of giving up the income on a standalone communications service as a way to embed video, freed from cost, into its new service. Throughout this yr’s pandemic that call has contributed to the massive uptake of Groups — within the course of limiting the potential progress of upstart video app Zoom.

However proving that Microsoft’s use of Groups quantities to abuse of a dominant place is more likely to be arduous. It begins with the truth that the 250m or so paying customers of Workplace 365 service might not give it the attain to qualify as a monopoly. Slack itself has usually made the case that Workplace is utilized by solely a subset of its goal market, leaving loads of room to develop.

However Slack’s legal professionals go additional, claiming that Microsoft’s complete set of enterprise software program — its tech stack — is being dropped at bear to defeat the upstart messaging app. Microsoft has actually made no secret of its intentions. On the very day that Slack filed its grievance, the software program firm’s executives used their newest earnings name to spotlight the progress they have been making in persuading clients to enroll in a full set of know-how.

The important thing indicator was not gross sales of Workplace 365, they stated, however rising gross sales of Microsoft 365 — the title given to a bundle of merchandise, launched in 2017, that features the productiveness apps, together with a broader set of applied sciences. 

A central ingredient of that is Lively Listing, an id administration service that runs on Home windows servers. In concept, by means of Lively Listing, somebody utilizing Groups may immediately join with anybody else on Microsoft’s platform, with no need to undergo the painstaking means of emailing a request to attach (even when, in apply, it has not reached this degree of integration but).

Tight integration, although, just isn’t in itself proof of Unlawful tying. Whereas pushing to promote extra bundles of know-how, Microsoft additionally sells its services and products individually. 13 years after it ended its final, protracted struggle with Microsoft, Brussels might properly suppose twice earlier than opening a brand new entrance — not least as a result of it already has a full plate because it tries to tackle Huge Tech.

Slack, in the meantime, has aligned itself extra carefully with Amazon, on the lookout for methods to attach its personal app to a few of that firm’s cloud providers. After blithely making an attempt to brush off the menace from Microsoft, its grievance to Brussels is a transparent signal that it’s feeling the warmth. Because the IT world consolidates round a handful of highly effective cloud computing platforms, the prospects for an progressive start-up are usually not getting any brighter.

richard.waters@ft.com

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