Grab your popcorn as Microsoft lands in hot water…

Promotional composite image of Microsoft Teams, showing the software running on a table and phone, surrounded by emojis.

The age-old battle between Microsoft and the European Commission has added a new page to its annals, as the Commission not only finds that the software giant has breached EU antitrust rules, but also considers that changes to the way Microsoft distributes its Teams app are “insufficient to address the concerns raised” and that “further changes to (its) conduct are necessary to restore competition.”

This is according to a recent statement by the European Commission (EC) presenting its preliminary findings from an antitrust investigation into Microsoft and its Teams cloud-based communications application. It all started when Slack Technologies (now owned by Salesforce) filed a complaint with the European Commission in 2020 alleging that Microsoft had illegally bundled Teams with its productivity software suites.

Three years later, the EC opened an investigation into whether Microsoft had breached Article 102 of the Treaty on the Functioning of the European Union, essentially a law that prohibits companies from abusing a dominant position in the EU market. Around the same time, Alphaview (a maker of videoconferencing software) filed a similar complaint, and the EC decided to adapt the investigation to cover both allegations.

In its statement, the Commission writes that Microsoft “restricts competition in the market for communications and collaboration products” and that the changes Microsoft made when the EC began its investigation “are insufficient to address its concerns and that further changes to Microsoft’s behavior are necessary to restore competition.”

The changes in question were quite simple: Microsoft stopped including Teams in its Microsoft 365 and Office 365 subscriptions for Switzerland and European Economic Area (EEA) countries. It has also adapted its software to enable companies like Zoom and Slack to create integrated solutions for products like Exchange, Outlook and, of course, Teams.

However, the European Commission remains concerned that “Microsoft may have provided Teams with a distribution advantage by not giving customers a choice as to whether they want to access Teams as part of the subscription to their SaaS productivity applications” and that “the conduct may have prevented Teams from competing with therefore, introducing innovations to the detriment of customers in the European Economic Area.”

If the EC’s doubts are confirmed during the investigation, after Microsoft has defended itself against its actions, the EC may impose a fine of up to 10% of the company’s annual global turnover. In 2023, Microsoft’s total revenues were just over $210 billion, so the fine would be the largest ever imposed in the company’s history in the European Commission, almost 10 times.

Even for the company with the largest market capitalization in the world, twenty billion dollars is not a small change. Not that this news worried investors, as Microsoft’s stock prices showed no signs of declining in value. I have no doubt that he will challenge the Commission’s findings, but whether he will simply pay the fine or make Teams a completely separate package is anyone’s guess at this point.

In the meantime, I’ll just munch on some popcorn and see what happens. Popcorn is a healthy snack, did you know that? Also tasty. Much nicer to eat than a certain cloud-based communication and collaboration tool, that’s for sure.