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

LONDON (AP) — Microsoft violated European Union antitrust laws with “likely abusive behavior” by combining its Teams messaging and videoconferencing app with widely used business software, the bloc said.

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

The commission, the main antitrust 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 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.

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

The commission attacked Microsoft a day after accusing Apple of violating new EU digital competition rules. It was a series of regulatory actions highlighting Brussels’ leading role as the regulator of large technology 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.”

“With the separation of Teams and initial interoperability steps taken, 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 worldwide 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 in Brussels. Alfaview, which makes videoconferencing software, also filed a separate complaint.

Slack, which is owned by business software maker Salesforce, has accused Microsoft of abusing its market dominance to eliminate competition – in breach 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 take steps towards a swift, binding and effective remedy that restores free and fair choice and promotes competition, interoperability and innovation in the digital ecosystem.”