The European Union has charged Microsoft with breaching antitrust regulations by bundling its Teams communication and collaboration app with its popular Office productivity suites. This move, the European Commission argues, has given Microsoft an unfair competitive edge in the software as a service (SaaS) market.
In a formal Statement of Objections, the EU’s executive body expressed concerns that Microsoft’s practice of integrating Teams with Office 365 and Microsoft 365 restricts competition. By not offering customers a choice to purchase these productivity applications without Teams, Microsoft may have hindered the ability of rival communication tools to compete effectively.
The Commission’s investigation, initiated in July 2023 following a complaint by Slack Technologies, suggests that the bundling strategy could have stifled innovation in the market. Slack, owned by Salesforce, provides a competing messaging service and claimed that Microsoft’s practices were detrimental to market competition. Additional complaints were lodged by Alfaview, a videoconferencing software provider, amplifying concerns about Microsoft’s market dominance.
Despite Microsoft’s efforts to address these concerns by unbundling Teams from its software packages in certain regions, the Commission found these measures insufficient. The regulatory body emphasized the need for more substantial changes to ensure a level playing field for all competitors in the market.
Microsoft, acknowledging the Commission’s feedback, has expressed its intention to cooperate and seek further solutions. The company had previously taken steps to enhance interoperability and offer alternative purchasing options for its software suites globally. However, the EU’s latest statement suggests that these steps fall short of restoring competition.
If the Commission concludes that Microsoft has indeed violated antitrust rules, the tech giant could face significant penalties. These may include fines up to 10% of its global revenue and mandatory adjustments to its business practices to foster a more competitive market environment.
The final decision from the Commission will follow after Microsoft has had the opportunity to respond to the allegations and propose further remedies.
