Microsoft in the crosshairs of EU antitrust authority over Teams and Office merger

Authors: Foo Yun Chee and Sudip Kar-Gupta

BRUSSELS (Reuters) – Microsoft found itself in the crosshairs of an EU antitrust investigation on Thursday over the merger of its Teams chat and video app with its Office suite, leaving it vulnerable to a hefty fine.

Over the past decade, the U.S. tech giant has faced financial penalties from the EU totaling €2.2 billion ($2.5 billion) for practices that violate EU competition rules, including bundling or offering two or more products.

Since then, Microsoft has adopted a more conciliatory approach towards the European Commission.

The European Commission’s investigation was triggered by a complaint filed in 2020 by Salesforce-owned messaging app Slack and after a remedy offer from the US tech giant failed to allay the EU competition enforcer’s concerns.

Teams, which Microsoft added for free to Office 365 in 2017 to eventually replace Skype for Business, has seen a surge in popularity during the pandemic, especially after it introduced videoconferencing.

The Commission wants to speed up its consideration of the case and intends to bring formal charges against Microsoft in the autumn if it does not improve its concessions, a person familiar with the matter told Reuters.

The European competition authority has raised concerns that Microsoft may be abusing and defending its market position in office software, limiting competition in the European market for communication and collaboration products.

“Remote communication and collaboration tools like Teams have become essential for many businesses in Europe. We must ensure that markets for these products remain competitive and that companies have the freedom to choose the products that best suit their needs,” EU antitrust chief Margrethe Vestager said in a statement.

A Microsoft spokesperson assured that Microsoft will continue to cooperate with the European Commission and that the company continues to strive to find solutions that address the Commission’s concerns.

Reuters reported earlier this month that the EU’s antitrust watchdog plans to open an investigation after Microsoft refused to offer deeper price cuts on its Office suite without Teams.

The European Commission hopes the price difference between Office with Teams and Office without the apps will ensure a level playing field and give consumers more choice, people familiar with the matter told Reuters.

German rival Alfaview, which filed a Slack-like complaint with EU authorities last week, welcomed the EU investigation.

“Our complaint aims to make clear that this is not a fight between two American tech giants, but rather about protecting innovation of all kinds,” the company’s CEO and founder, Niko Fostiropoulos, said in a statement.

Financial penalties imposed by the EU for antitrust violations can amount to up to 10% of a company’s global turnover.

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(Reporting by Foo Yun Chee; Editing by Sudip Kar-Gupta, David Evans and Jane Merriman)