European Union says Microsoft violated antitrust rules by bundling Teams app with office software

LONDON — Microsoft violated European Union antitrust rules by using “likely abusive” practices to bundle its Teams messaging and videoconferencing app with its widely used business software, the EU said.

The European Commission said on Monday it had informed Microsoft of its preliminary view that the U.S. tech giant was “restricting competition” by bundling its Teams service with core productivity applications such as Office 365 and Microsoft 365.

The commission, the 27-nation bloc’s chief antitrust enforcer, said it suspected Microsoft may have given Teams a “distribution advantage” by not giving customers a choice about whether they wanted Teams when they bought the software. That advantage may have been widened by limits on the ability of competing messaging apps to work with Microsoft’s software, she said.

“We are concerned that Microsoft may be giving its Teams communications product an undue competitive advantage by tying it to its popular enterprise productivity software suites,” Margrethe Vestager, executive vice-chair of the competition policy committee, said in a statement.

“Maintaining competition in remote communication and collaboration tools is essential because it also fosters innovation in these markets.”

The Commission took aim at Microsoft a day after it accused Apple of breaching a new set of digital competition rules in a series of regulatory actions underlining Brussels’ leading role as a watchdog over Big Tech companies.

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

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

In April, the company gave customers around the world the option to get Microsoft 365 and Office 365 without Teams. The two software packages include programs such as Word, Excel and Outlook.

Microsoft now has a chance to respond to the allegations, formally called a statement of objections, before the committee makes a final decision. The company could face fines of up to 10% of its annual global revenues or be forced to take “remedial measures” to address competitive concerns.

The commission opened an investigation in July 2023 after rival Slack Technologies, which makes popular workplace messaging software, filed a complaint with Brussels. Alfaview, which makes videoconferencing software, also filed a separate complaint.

Slack, owned by business software maker Salesforce, accused Microsoft of abusing its market dominance to eliminate competition – in violation of EU law.

“The Statement of Objections announced by the European Commission today is a win-win for customer choice and confirmation that Microsoft’s practices in Teams harmed competition,” said Salesforce CEO Sabastian Niles. “We appreciate the Commission’s thorough investigation into Slack’s complaint and urge the Commission to move toward a swift, binding and effective remedy that restores free and fair choice and promotes competition, interoperability and innovation in the digital ecosystem.”