On 06 December, the European Commission granted competition clearance to the acquisition of LinkedIn by Microsoft, subject to certain conditions. The Commission has become increasingly active in the tech/social media sector in recent years, not least by its reviews of the Google/DoubleClick, Microsoft/Skype and Facebook/WhatsApp mergers, but also in its recent antitrust investigation of Google.
Although the Commission considered that there is very minimal overlap in the business activities of the parties, it expressed concerns that Microsoft would pre-install LinkedIn on its Windows operating system and integrate it into its Microsoft Office software. While there was no suggestion that Microsoft would breach contract and privacy laws, the Commission also had concerns around Microsoft’s acquisition of the large volume of LinkedIn’s user data, and the possibility of combining the LinkedIn user database with its own.
As the deal was announced, EU Commissioner Margrethe Vestager commented “the data purchased in the deal has a very long durability and might constitute a barrier for others, or if they can be replicated so that others stand a chance to enter the market”. Ultimately, the Commission found that the pre-installation of LinkedIn could have greatly enhanced LinkedIn's visibility and expand its user base, which would be to the detriment of its competitors.
In order to address the Commission’s concerns, Microsoft offered a series of commitments as a remedy, including ensuring that PC manufacturers and distributors would be free not to install LinkedIn on Windows, and allowing users to remove LinkedIn from Windows should PC manufacturers and distributors decide to pre-install it.
By accepting these commitments, the Commission is seeking to pre-empt any competition issues arising from the merger by preserving the competitive status quo. The commitments will allow competing professional social network service providers to maintain current levels of interoperability with Microsoft’s software. The Commission has stated that it is satisfied that these commitments address all identified competition concerns, and the commitments will apply throughout the EEA for a period of 5 years.
Microsoft has been here before
The Commission and Microsoft have a long history in competition law matters, and as a result, this merger was examined with particular scrutiny by the Commission. It fined Microsoft €561 million in 2013 for breaching the previous set of binding commitments offered in 2009. In that case, Microsoft failed to abide by its commitments to offer first-time users a choice of web-browsers, rather than choosing its proprietary “Internet Explorer” browser by default. In addition, the Commission fined Microsoft €497 million in 2004 in finding it abused its dominant position in respect of the interoperability between Windows and work group servers and on the tying of Windows Media Player to Windows..