EU accuses Microsoft of ‘abusively’ bundling Teams and Office, violating antitrust rules

EU accuses Microsoft of ‘abusively’ bundling Teams and Office, violating antitrust rules

On Tuesday, the European Union (EU) accused Microsoft of violating antitrust rules by “abusively” bundling its Teams and Office products.

The European Commission, the EU’s executive arm, has issued a statement of objection to Microsoft, saying it believes the company has violated EU antitrust rules by linking its communications and collaboration tool, Teams, with its popular productivity applications in Office 365 and Office 365. Microsoft 365 business suites.

If the Commission determines that a violation has occurred after reviewing companies’ responses, it has the authority to prohibit such conduct and impose fines of up to 10% of the accused company’s global revenue.

In an effort to address the EU’s antitrust concerns, Microsoft had already separated Teams from Microsoft 365. However, the Commission said in its statement on Tuesday that these changes are not enough to address their concerns and that further changes to practices are needed of Microsoft to restore competition.

Microsoft has expressed its intention to work to find solutions to address the additional concerns raised by the Commission. In a statement Tuesday, Microsoft Vice President and President Brad Smith said, “After separating Teams and taking the first steps toward interoperability, we appreciate the additional clarity provided today.” The company’s shares were essentially flat in premarket trading Tuesday.

The EU launched the investigation into Microsoft in July 2023 following a complaint from Salesforce-owned Slack, a Teams competitor in the chat services market.

The Commission’s concerns revolve around Microsoft’s practice of tying Teams to its Software as a Service (SaaS) applications, such as Office, starting around 2019. Microsoft is recognized as a dominant player in the global SaaS market for professional productivity applications.

The Commission is particularly concerned that Microsoft may have given Teams a distribution advantage by not offering customers the option to opt out of Teams when subscribing to their SaaS productivity applications. The EU regulation highlights that Microsoft’s advantage may have been further strengthened by interoperability limitations between Microsoft’s offerings and those of Teams’ competitors.

The Commission suggests that Microsoft’s behavior may have impeded competition among Teams rivals and hindered innovation to the detriment of customers in the European Economic Area. The investigation into Microsoft’s practices is ongoing, and the company will need to address the Commission’s concerns to resolve the antitrust case.