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Microsoft faces EU probe over bundling of Teams

By Nithya Bose in UK Business News, posted July 28, 2023

European Union antitrust regulators have opened a probe into Microsoft's bundling of its video and chat app, Teams, with other Office products.

The European Commission, the EU's executive arm, said these practices might amount to anti-competitive behavior.

This is the EU's first antitrust investigation of the tech giant in over a decade.

Regulators said: “The Commission is concerned that Microsoft may grant Teams a distribution advantage by not giving customers the choice on whether or not to include access to that product when they subscribe to their productivity suites and may have limited the interoperability between its productivity suites and competing offerings.”

The Commission is concerned Microsoft's approach could give Teams an unfair distribution advantage, as customers can’t exclude the app when subscribing to Office 365.

What this means is the limitation could hinder competition in the workplace messaging and video app space, preventing other communication and collaboration tools from vying for market share.

The Commission added such practices may constitute anti-competitive tying or bundling, potentially impeding other companies' ability to compete effectively.

Microsoft 365, formerly Office 365, has various software, including popular workplace-focused applications like Word and Excel.

Antitrust investigations don’t have a predefined completion deadline, and if found to violate EU competition rules, Microsoft could face a fine of up to 10 percent of its total global annual turnover.

The concerns surrounding Microsoft's practices were initially raised in 2020 when Slack, a competitor to Teams owned by Salesforce, filed a complaint with the EU.

Slack alleged Microsoft unlawfully tied Teams to its dominant productivity packages, leaving millions of users with no choice but to install Teams without the option to remove it.

A Microsoft spokesperson responded: "We respect the European Commission's work on this case and take our own responsibilities very seriously.

“We will continue to cooperate with the Commission and remain committed to finding solutions that will address its concerns."

The software giant’s previous EU antitrust probe occurred in 2009 and involved its web browser, Internet Explorer.

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The EU voiced competition distortion when Microsoft bundled Internet Explorer with its Windows operating system.

As a remedy, Microsoft committed to providing Windows users with a choice of rival web browsers.

More recently, Microsoft's proposed $69 billion acquisition of Activision Blizzard faced EU scrutiny over potential competition distortions in the console and cloud gaming market.

The tech giant offered solutions to the EU, leading to the deal's approval by regulators in May.

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