The Commission s decision in Microsoft/LinkedIn

Transcription

1 The Commission s decision in Microsoft/LinkedIn Artificial Intelligence, big data and social networks AntitrustItalia, 23 February 2017 Michele Piergiovanni, Salvatore De Vita, Cristina Sjödin Mergers IT, media and telecoms, DG Competition - European Commission The views expressed in this presentation are personal and do not necessarily reflect the views of the European Commission.

2 1 1. Introduction 2. Online advertising/data and CRM No competition concerns 3. Professional social networks Competition concerns remedied

3 2 The Transaction Acquisition by Microsoft of sole control of LinkedIn through purchase of shares Notified on 14 October 2016 Approved in Phase I subject to commitments Commission decision of 6 December 2016 (case M.8124 Microsoft/LinkedIn)

4 3 The Parties Leading supplier of Operating Systems for desktops o [80-90]% market share (shipments) o 300 million active devices with Windows 10 Leading supplier of productivity software o >90% market share (revenue) o 1.2 billion users of Microsoft Office Provides Customer Relationship Management ("CRM") software solutions MS Dynamics (below 5% market share) Leading professional social network ("PSN"): o 433 million registered members o of which 107 million monthly active users ("MAUs") Turnover in 2015: EUR 2.7 billion, distributed as follows: o Premium subscriptions sold to consumers (18%) which includes Sales Navigator (a sales intelligence solution) o Talent and recruitment solutions (63%) o Marketing solutions (19%)

5 4 1. Introduction 2. Online advertising/data and CRM No competition concerns 3. Professional social networks Competition concerns remedied

6 5 Search advertising: o Only Microsoft is active o Microsoft has small presence o Google clear market leader Data Combination: Microsoft data LinkedIn data Merged Entity data Online advertising and data No competition concerns Non-Search advertising: o Combined market share below 10% in any EEA Member State o Other competitors active No competition concerns? Increase market power Increase barriers to entry o No overlap on a potential market for advertising on PSN o Combination of data subject to Data Protection rules o Microsoft and LinkedIn were not offering their data to third parties o Data are available from data providers o Strong competitors remain active in the online nonsearch advertising market

7 Foreclosure of CRM providers Conglomerate effects Current data flow Providers of sales intelligence solutions ("SIS") Bundling postmerger Providers of customer relationship management ("CRM") solutions Microsoft could bundle LinkedIn Sales Navigator with Microsoft Dynamics CRM However: No ability Sales Navigator not considered "essential" by CRM customers or competitors (only 10% market share) No incentive Sales Navigator's revenue mainly from customers of competing CRM solutions Loss of revenues from Sales Navigator likely be higher than additional revenues from CRM No impact on effective competition Customer switching is not likely Alternative sales intelligence solutions available: Avention, D&B, Data.com CRM competitors would remain in the market Negligible impact on Microsoft's market share if all Sales Navigator's customers would switch to Microsoft Customers of CRM and SIS 6

8 7 Foreclosure of CRM providers Vertical effects Potential future data flow for CRM machine learning Input foreclosure post-merger Providers of CRM solutions Customers of CRM solutions Microsoft would deny competing CRM providers access to LinkedIn "full data" to develop CRM machine learning However: No ability Unclear to what extent LinkedIn's full data would be useful for CRM machine learning : No evidence that LinkedIn would have given access to its full data for machine learning absent the merger Microsoft internal documents did not mention use of LinkedIn full data for CRM machine learning LinkedIn data one of several input for ML No incentive Microsoft's incentive would be similar to the one to monetize Sales Navigator No impact on effective competition Customer switching is not likely LinkedIn data useful only on certain CRM market segments Alternative sources of data for CRM ML available (e.g. D&B, Data.com) CRM competitors offer and would continue to offer CRM machine learning

9 8 1. Introduction 2. Online advertising/data and CRM No competition concerns 3. Professional social networks Competition concerns remedied

10 9 Professional social networks / OSs / Productivity software Market definition Market for professional social networks ("PSNs ) Irrespective of device / operating system PSNs market (including e.g. LinkedIn, XING, Viadeo) held distinct from: Enterprise social networks (e.g. Yammer, FB Workplace) Vertical social networks (e.g. Academia, Doximity) Personal social networks (e.g. Facebook, Twitter) Geographic PSNs market likely national in scope Market for operating systems for PCs, EEA-wide Market for productivity software for PCs, EEA-wide

11 10 Foreclosure of rival PSNs Conglomerate effects Overview Concern: Leveraging of Microsoft s strong position from PC OS market / from PC productivity SW market to PSNs markets, leading to foreclosure of competing PSNs Steps: 1. Promotion of LinkedIn through combination with Microsoft Windows and Office products 2. Increase in LinkedIn membership and usage 3. Marginalisation of existing PSNs and increased barriers to entry for potential new PSNs 4. Detrimental effects on consumers

12 11 Foreclosure of rival PSNs Conglomerate effects Steps Promotion of LinkedIn through combination with Microsoft Windows and Office products Pre-installation of LinkedIn application on Windows OS based PCs Integration of LinkedIn features into Microsoft Office products (e.g. Outlook, Word) and refusal of rival PSNs access to Microsoft APIs 2. Increase in LinkedIn membership and usage Increased visibility to large number of (potential) customers, i.e. Windows OS PC users and Microsoft Office users No effective counterstrategies available to competing PSNs

13 12 Foreclosure of rival PSNs Conglomerate effects Steps Marginalisation of existing PSNs and increased barriers to entry for potential new PSNs Network effects leading to "tipping" of PSN market in favour of LinkedIn Impact of network effects not sufficiently mitigated by multi-homing or by potential entry of new PSNs 4. Detrimental effects on consumers Reduced consumer choice regarding existing/new entrant PSNs Reduced consumer choice in relation to privacy (e.g. if marginalisation of XING in Germany/Austria)

14 13 Foreclosure of rival PSNs Commitments addressing Windows pre-installation concern Microsoft commits to: Allow OEMs / PC distribution partners not to install the LinkedIn application/tile on Windows PCs. Not retaliate against or enter into exclusive agreements with OEMs / PC distribution partners to prevent them from distributing a Windows PC application/tile for competing PSNs. Allow end users to remove LinkedIn application/tile from Windows PC OS. Not "push" LinkedIn application/tile to end users through Windows PC OS (e.g. as part of Windows updates). Temporal/geographic scope: 5 years duration, EEA-wide.

15 14 Foreclosure of rival PSNs Commitments addressing concern of Office integration and denial of access to Microsoft APIs Microsoft commits to: Continue to make available Office Add-in Program and Office APIs to competing PSNs to enable them to build add-ins for Office (downloadable from the Office Store). Continue to make available Microsoft Graph to competing PSNs. Allow Office add-ins of competing PSNs to run independently of integrated LinkedIn features. Allow Office end users to disable LinkedIn features integrated into Office. Temporal/geographic scope: 5 years duration, EEA-wide.

16 Any questions?