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 body, has issued a statement of objections to Microsoft, saying it believes the company has violated EU antitrust rules by linking its communications and collaboration tool, Teams, to its popular productivity applications in the Office 365 and Microsoft 365 business suites.

If, after examining the companies’ responses, the Commission determines that an infringement has occurred, it has the authority to prohibit such conduct and impose fines of up to 10% of the accused company’s global turnover.

In an effort to address EU antitrust concerns, Microsoft had already separated Teams from Microsoft 365. However, the Commission said in its statement on Tuesday that these changes were not enough to address their concerns and that further changes to Microsoft’s practices were needed 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 on interoperability, we appreciate the additional clarity provided today.” The company’s shares were essentially flat in premarket trading Tuesday.

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

The Commission’s concerns revolve around Microsoft’s practice of connecting 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 choice to opt out of access to Teams when they subscribe 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 hindered competition among Teams’ rivals and prevented innovation to the detriment of customers in the European Economic Area. The investigation into Microsoft’s practices is ongoing and the company will have to address the Commission’s concerns to resolve the antitrust case.