Microsoft breached EU rules by committing “likely abuse” by combining Teams with Office

Microsoft breached European Union competition rules by using “likely abuses” by combining its Teams messaging and video conferencing app with widely used business software, the bloc said.

The European Commission said on Monday it had informed Microsoft of its initial opinion that the US tech giant was “restricting competition” by bundling its Teams service with core office applications such as Office 365 and Microsoft 365.

It came a day after European Union regulators accused Apple of breaking new digital competition rules by preventing software developers in the App Store from directing users to other places.

The commission, the top competition enforcer in the 27-nation bloc, said it suspected Microsoft may have given Teams a “distribution advantage” by not giving customers a choice about whether they wanted to use Teams when purchasing the software.

It said the advantage may have been increased by limitations in the ability of competing messaging applications to work with Microsoft software.

“We are concerned that Microsoft may be giving its own Teams communications product an undue competitive advantage by bundling it with popular business productivity suites,” said Margrethe Vestager, executive vice-chair of the competition policy committee.

“Keeping remote communication and collaboration tools competitive is essential because it also drives innovation in these markets.”

To avoid the penalty, Microsoft made some changes last year, including offering software packages without Teams to European customers. But the commission said on Tuesday that the changes were not enough to address its concerns and that it needed to do more to “bring competition back.”

Microsoft CEO Brad Smith said in a prepared statement: “With the separation of Teams and initial interoperability steps taken, we appreciate the additional clarity provided today and will work to find solutions that address the Commission’s remaining concerns.”

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In April, the company made it available to customers around the world to purchase Microsoft 365 and Office 365 without Teams. Both software packages include programs such as Word, Excel and Outlook.

Microsoft now has the chance to respond to the allegations, formally known as a statement of objections, before the Commission makes a final decision.

The company could face fines of up to 10% of its annual global revenues or be forced to implement “remedial measures” to address competitive concerns.

The commission opened an investigation in July 2023 after rival company Slack Technologies, maker of popular workplace messaging software, filed a complaint with Brussels. A second company, videoconferencing software maker Alfaview, filed a second complaint.

Rival messaging platform Slack, owned by business software maker Salesforce, accuses Microsoft of abusing its market dominance to eliminate competition – in violation of EU law – by illegally combining Teams with the Office suite, which includes Word, Excel and Outlook.

Sabastian Niles, president and chief legal officer at Salesforce, said: “The Statement of Reservations issued today by the European Commission is a customer choice benefit and an acknowledgment that Microsoft’s Teams practices have harmed competition.

“We appreciate the Commission’s thorough investigation into Slack’s complaint and urge the Commission to take steps toward a swift, binding and effective remedy that restores free and fair choice and promotes competition, interoperability and innovation in the digital ecosystem.”

Press Association – Kelvin Chan, Associated Press