Microsoft faces new EU antitrust charges over Teams

The European Commission has accused Microsoft of illegally linking its Teams chat and video application to the popular Office suite.

A recent antitrust complaint filed by rival Slack (now owned by Salesforce) could result in a hefty fine for Microsoft if it is found guilty of alleged antitrust violations. The company faces a fine of 10% of its annual global turnover.

The European Commission, the EU’s competition watchdog, said Teams had gained an “unfair advantage” in distribution. The Commission also confirmed that restrictions imposed by Microsoft designed to prevent its competitors from using its Teams integrated software offering commercially stifled competition.

EU Commissioner for Competition Margrethe Vestager highlighted the importance of this case, stating: “Maintaining competition in remote communication and collaboration tools is essential because it also fosters innovation in these markets.”

This is not Microsoft’s first meeting with EU antitrust authorities. Two decades ago, it paid €2.2 billion in fines for such tying practices and other crimes. There are some similarities between the recent case and older allegations, but it also highlights the struggle that tech giants have had for decades to balance product collaboration and competition.

Microsoft has responded to these concerns by taking action in several areas, including globally separating Teams from Office and increasing compatibility with its products. However, the Commission has issued an official warning that these steps are not sufficient and that wider changes are needed to restore competition.

Sources familiar with the matter suggest the EU wants Microsoft to sell Office without Teams at a lower price than what was announced. Competitors are also demanding clearer interoperability conditions and more incentives for users to switch to alternative platforms.

Microsoft CEO Brad Smith reaffirmed the company’s willingness to address these issues: “With Teams unbundled 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.”

Industry observers and stakeholder reactions

The matter is being watched by industry stakeholders and competitors. Salesforce CEO and Chief Legal Officer Sebastian Niles urged the Commission to act quickly on a “binding and effective legal measure” that will restore freedom of choice to the market. Another complainant, German rival Alfaview, welcomed the Commission’s action against Microsoft.

Teams, a free addition to Office 365 in 2017 that effectively replaced Skype for Business, has become extremely popular during the pandemic. Beyond the outbreak, competitors say Microsoft has secured such deals by bundling the product with Office and offering a market-leading video conferencing solution.

The case is part of a broader examination of giant tech companies and their business practices. It also highlights the difficult trade-offs between combining product elements to enhance user well-being while maintaining meaningful competition in rapidly changing digital markets.

It will be key to see how Microsoft continues to deal with these regulatory challenges as the investigation unfolds and what countermeasures are implemented to change competition in such an undoubtedly critical market as productivity software. But the outcome of this case could have huge, precedent-setting consequences for the way tech companies package their products and services in the future.

See also: Microsoft unveils DirectSR to standardize super-resolution technologies

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Tags: competition, development, eu, european commission, european union, microsoft, politics, regulation