EU accuses Microsoft of antitrust violations for bundling Teams with O365

Statement of Objections sent to Redmond HQ following probe that began July 2023

Microsoft broke the European Union's antitrust regulations by "tying" collaboration tool Teams to its dominant online Office productivity suite, according to preliminary findings from an investigation begun in July 2023.

The EU's antitrust team informed the Redmond-based biz in a Statement of Objections document, and the company told The Register it is willing to make further concessions, thereby staving off the threat of possible legal action and potentially significant fines.

"Microsoft has been tying Teams with its core SaaS productivity applications, thereby restricting competition on the market for communication and collaboration products and defending its market position in productivity software and its suites-centric model from competing suppliers of individual software," the EC said in a statement.

"In particular, the Commission is concerned that Microsoft may have granted Teams a distribution advantage by not giving customers the choice whether or not to acquire access to Teams when they subscribe to their SaaS productivity applications.

"This advantage may have been further exacerbated by interoperability limitations between Teams' competitors and Microsoft's offerings. The conduct may have prevented Teams' rivals from competing, and in turn innovating, to the detriment of customers in the European Economic Area."

This would infringe Article 102 of the Treaty on the Functioning of the European Union, the legislation that prohibits abuse of a market-dominant position, the EC claims. Sending the Statement of Objections does not prejudice the outcome of a market probe.

Margarethe Vestager, executive veep in charge of competition policy, said in a statement: "We are concerned that Microsoft may be giving its own communication product Teams an undue advantage over competitors, by tying it to its popular productivity suites for businesses. And preserving competition for remote communication and collaboration tools is essential as it also fosters innovation on these markets. If confirmed, Microsoft's conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns."

A spokesperson for Microsoft told The Register: "Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the Commission's remaining concerns."

Rival Slack lodged a complaint about Microsoft bundling Teams with Office 365 and Microsoft 365 with the European Commission in 2020, describing it as "illegal and anti-competitive practice of abusing its market dominance to extinguish competition."

In late July 2023 – after the EC began its probe – Microsoft said it would make some concessions in the EU, the most significant of which involved unbundling Teams from Office 365 and Microsoft 365. It made the same move globally earlier this year, allowing customers to continue as before, remove Teams from the license, or buy Teams as a standalone apps.

Microsoft has continued to say it will give ground to pacify the EC antitrust crew, even though it is clearly still backing the bundling policy elsewhere.

Teams has around 320 million monthly active users globally as of March this year, and Slack said in 2022 it had an estimated 35 million daily users. Google said of Microsoft's concessions that it was "too little, too late" as the policy has helped Microsoft build its installed base.

A spokesperson for Salesforce-owned Slack told us today: "The Statement of Objections issued today by the European Commission is a win for customer choice and an affirmation that Microsoft's practices with Teams have harmed competition. We appreciate the Commission's thorough investigation of Slack's complaint and urge the Commission to move towards a swift, binding, and effective remedy that restores free and fair choice and promotes competition, interoperability, and innovation in the digital ecosystem." ®

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