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

LONDON — Microsoft violated European Union antitrust rules by engaging in “likely abusive behavior” by combining its Teams messaging and video conferencing app with widely used business software, the bloc said.

The European Commission said on Monday it had informed Microsoft of its initial opinion that the US tech giant was “restricting competition” by bundling its Teams service with core office 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 own Teams communications product an undue competitive advantage by bundling it with popular business productivity suites,” Margrethe Vestager, executive vice-chair of the competition policy committee, said in a statement.

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

The commission took aim at Microsoft a day after accusing Apple of violating a new set of digital competition rules in a series of regulatory actions underscoring Brussels’ leading role as a regulator of Big Tech companies.

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

“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 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 implement “remedial measures” to address competitive concerns.

The Commission opened its investigation in July 2023 after rival Slack Technologies, maker of popular workplace messaging software, filed a complaint in Brussels. A separate complaint was also filed by Alfaview, maker of videoconferencing software.

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

“The European Commission’s Statement of Objections announced today is a win-win for customer choice and an acknowledgment that Microsoft’s Teams practices have 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 toward a swift, binding and effective remedy that restores free and fair choice and promotes competition, interoperability and innovation in the digital ecosystem.”