In a nutshell: An EU investigation accuses Microsoft of breaching antitrust regulation by bundling Teams with its Office 365 and Microsoft 365 subscriptions. This move is deemed to have restricted competition from communication software rivals like Slack and given Microsoft an unfair market advantage. If found guilty, the company could face heavy fines.
European Union regulators have accused tech giant Microsoft of breaching their antitrust laws by tying Microsoft Teams to its Office 365 and Microsoft 365 subscription services, after a lengthy investigation into the company's practices.
In a Statement of Objections released today, the European Commission stated that their objections to Microsoft's practices revolve around the company gaining an unfair distribution advantage by not allowing consumers to choose whether or not to adopt the communication service. "The Commission is concerned that Microsoft may have granted Teams a distribution advantage by not giving customers the choice whether or not to acquire access to Teams when they subscribe to their SaaS productivity applications," the statement reads.
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"This advantage may have been further exacerbated by interoperability limitations between Teams' competitors and Microsoft's offerings. The conduct may have prevented Teams' rivals from competing, and in turn innovating, to the detriment of customers in the European Economic Area."
The Commission says that if proved true, these practices would infringe upon Article 102 of the Treaty on the Functioning of the European Union (TFEU), which aims to prevent the abuse of a dominant market position by an entity. The EU Commission began their investigation into this issue on July 27, 2023, after a complaint was filed by rival Slack Technologies, Inc. A subsequent complaint was also filed by German video conferencing company Alfaview, who had similar grievances.
Microsoft unbundled Teams from some of its SaaS packages in an attempt to rectify these complaints in July 2023, but the Commission says that the changes have not been sufficient enough to "restore competition." The competition in this case being other communication services like claimants Slack and Alfaview. Since Windows and the Office suite are dominant across the globe, it means that many private and commercial consumers adopt Teams as their de facto communication application since it comes bundled with those software packages. This, in turn, can restrict competition.
"Preserving competition for remote communication and collaboration tools is essential, as it also fosters innovation on these markets," says Margrethe Vestager, the VP in charge of competition policy. "If confirmed, Microsoft's conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns."
Microsoft president Brad Smith has already issued a statement to the Financial Times, saying "having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the Commission's remaining concerns."
The company faces heavy fines of up to 10% of its worldwide annual turnover if it is found to have breached Article 102, and the EU Commission may also go on to impose other "remedies" they deem "proportionate" to end the infringement. Microsoft still has a right to defend itself against the allegations.
This isn't the first time Microsoft faces these kind of antitrust allegations. Last year, the company faced heavy pressure from the US FTC and its UK equivalent when it tried to acquire gaming giant Activision Blizzard because of its market dominance – Microsoft ultimately did acquire the gaming publisher, however.
Microsoft faces heavy fines after EU investigation into unfair Teams bundles
