The EU has accused Microsoft of violating antitrust rules. The European Commission claims that by including Teams in the Office 365 and Microsoft 365 suites, the company disproportionately restricts competition in the communication applications market.
The main reason for this is that Microsoft's suite of business productivity tools, such as Excel, Outlook and PowerPoint, are the second most popular globally after Google Workspace. Therefore, when Teams is included with 365 by default, it gives the company a so-called “distribution advantage.”
Customers are unlikely to look for another communications app if they've invested in 365 tools and Teams includes them automatically. Any interoperability limitations between Microsoft's offerings and Teams competitors exacerbate this problem.
“This conduct may have prevented Teams' rivals from competing and in turn innovating, to the detriment of customers in the European Economic Area,” the Commission said in a press release.
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In a prepared statement, Microsoft President Brad Smith told TechRepublic: “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.” .
Sabastian Niles, president of Salesforce, Slack's parent company, told TechRepublic in a statement: “The statement of objections issued today by the European Commission is a victory for customer choice and an affirmation that Microsoft's practices with Teams have harmed competition.
“We appreciate the Commission's thorough investigation into the Slack complaint and urge the Commission to move towards a swift, binding and effective solution that restores free and fair elections and promotes competition, interoperability and innovation in the digital ecosystem.” .
How the charges against Microsoft arose
The charges against Microsoft have been brought through a statement of objections, which is a formal document setting out the Commission's preliminary conclusions that a company may have infringed EU antitrust laws. It is related to two investigations into Microsoft.
The first investigation was opened in July 2023 due to a complaint from Slack alleging that Microsoft was “forcing millions to install (Teams), blocking its removal, and hiding the true cost to enterprise customers.” The complaint was filed in July 2020 after the COVID-19 pandemic spurred a global transition to working from home and remote collaboration tools like Teams, Slack and Zoom became essential.
In July 2023, alfaview, a German video conferencing solutions provider, filed a complaint similar to that of Slack and, as a result, the European Commission launched a second investigation.
After the initial investigation began, Microsoft separated Teams from Office in Europe before rolling out the change globally. However, the Commission considers that these changes are “insufficient” to restore competition and continue to violate Article 102 of the Treaty on the Functioning of the European Union, which prohibits the abuse of a dominant market position.
What happens next?
The statement of objections seeks to inform Microsoft of the charges made against it and it is now invited to respond. There is no set deadline for an investigation like this; However, if the violations are confirmed after Microsoft has exercised its right of defense, it could be fined up to 10% of its annual worldwide turnover. The EU could also impose solutions to restore competition.
Previous investigations into Microsoft's conduct by international regulators
The Teams investigation is not the first time Microsoft has been accused of violating EU regulations. In 2004, the European Commission fined Microsoft €497 million for including Windows Media Player with its Windows operating system, as this stifled competition from other media players. The company was ordered to offer a version of Windows without Windows Media Player, resulting in the release of Windows XP N in EU markets.
Five years later, the Commission launched an investigation against Microsoft for including Internet Explorer with Windows for the same reason. As a result, the tech giant was ordered to offer users a “browser choice” screen to select their preferred web browser when installing Windows. Since this screen was not included in Windows 7 Service Pack 1 for 14 months after its release, Microsoft was fined 561 million euros.
The United States also brought the Internet Explorer issue to light in a landmark antitrust case against Microsoft in 2001, which resulted in a settlement in which Microsoft agreed to modify some of its business practices.
Microsoft is also at the center of other investigations with the EU and other international regulators. Its $75 billion acquisition of Activision Blizzard was finally cleared last year after nearly two years of negotiations with the UK Competition and Markets Authority due to its potential impact on competition in the gaming industry.
The CMA, the US Department of Justice and the Federal Trade Commission are reportedly still considering launching an investigation into Microsoft's $13 billion partnership with OpenAI on antitrust grounds, but the E.U. decided not to do it. The Association of Cloud Infrastructure Service Providers in Europe is also involved in a dispute with Microsoft over how its cloud licensing practices unfairly disadvantage rival cloud service providers.
The recent EU crackdown on tech giants
Microsoft is not the only one under EU scrutiny, as the bloc has been cracking down on monopolization of big tech platforms in recent months.
On Monday, the European Commission formally accused Apple of violating the Digital Markets Act because it does not allow developers to “steer” users of their apps toward third-party purchasing options.
Meta could be charged for violating the DMA through its ad-free subscription tiers for Facebook and Instagram. These options create the so-called “pay or consent model” and “may not provide a real alternative in case users do not give their consent,” the Commission stated.
SEE: The European Commission examines the walled gardens of Alphabet, Apple and Meta under the DMA
EU regulators are also investigating whether Alphabet, Google's parent company, disproportionately favors Google Play and its own services in Google search results and whether Amazon unfairly promotes its own products in its shopping marketplace.
TikTok may have violated the Digital Services Act by not conducting a proper risk assessment of its rewards program on TikTok Lite before its European launch, while X could have done the same for a number of reasons, including content moderation and advertising transparency. For this reason, the Commission is investigating both of them.
