EU accuses Microsoft of antitrust violations over Teams bundling

The European Commission has formally accused Microsoft of antitrust violations related to the integration of its Teams chat application with its Office 365 and Microsoft 365 productivity suites. This is the first time in 15 years that Microsoft has faced such accusations in the EU, with previous cases involving the bundling of Windows Media programs Player and Internet Explorer.

In a statement, the European Commission raised concerns that Microsoft’s bundling of Teams with its popular productivity apps gives the communications app an unfair “distribution advantage” over competing products such as Slack and Zoom. Despite Microsoft’s efforts to address these issues – such as separating Teams from Office in Europe last year and establishing it as a standalone app globally – the Commission continued to charge fees.

Margrethe Vestager, the EU’s competition policy chief, said Microsoft’s conduct, if confirmed, would be unlawful under EU competition rules. Microsoft has now received a statement of objections setting out the Commission’s concerns and the company has the opportunity to respond.

Microsoft acknowledged the Commission’s concerns and committed to working with regulators to find appropriate solutions. Company CEO Brad Smith said: “With Teams separated 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.”

An investigation into Microsoft Teams was launched by EU lawmakers following a complaint filed by Slack in July 2020. Slack, now owned by Salesforce, alleged that Microsoft “illegally bundled” Teams with Office, “forced you to install it for millions, blocking its removal, and hiding the true costs for corporate customers.”

If Microsoft is found guilty of violating antitrust laws, it could face fines of up to 10% of its annual global turnover. The European Commission could also impose remedial measures to force Microsoft to adapt its software, as in previous cases where the company was required to make changes due to antitrust cases.

In previous EU antitrust proceedings, Microsoft was ordered to offer a version of Windows without Windows Media Player and to implement browser selection functionality in Windows. In 2013, the company was also fined $730 million for failing to include a browser ballot in Windows 7 SP1.

The latest allegations against Microsoft come amid a broader crackdown by the European Union on the business practices of major tech platforms. In recent months, regulators have also accused Apple of antitrust violations over its App Store policies, while Amazon, Google, Meta, TikTok and X are also under investigation.

Potential market impact

The outcome of this case could have significant implications for the communications and collaboration software market. If the European Commission finds Microsoft guilty of antitrust violations, it could force the company to make significant changes to the way it distributes and integrates Teams with other products.

This could potentially open up more opportunities for competing products such as Slack, Zoom and other communication tools to compete on a more level playing field. Some analysts, however, believe that Microsoft’s bundling strategy has already given Teams a significant advantage and that unbundling may not have a major impact on market dynamics.

Holger Mueller, an analyst at Constellation Research, suggests that Microsoft has “already sold Teams to enough companies with existing Office accounts” that it may no longer need the power of an enterprise licensing agreement. He believes this could help Microsoft sell standalone Teams licenses to non-Microsoft customers while also building a good reputation with regulators.

Ultimately, the outcome of this case will depend on the final ruling of the European Commission and any corrective measures it will impose on Microsoft. The tech giant’s response and ability to adapt to any changes will also be key in determining its long-term impact on the communications and collaboration software market.

Disclaimer: The views expressed in this article are those of the author(s) and do not necessarily reflect the views of ET Edge Insights, its management or its members