Microsoft Faces European Antitrust Investigation Over Bundling of Teams Software

A Microsoft stand at the Mobile World Congress in Barcelona.
A Microsoft stand at the Mobile World Congress in Barcelona.

Summary

  • Probe marks the first time in a decade that Microsoft has come under formal investigation by Brussels

The European Union opened an antitrust investigation into whether Microsoft is abusing its dominant position by bundling its Teams videoconferencing app with its popular Office productivity software, marking the first formal EU probe of the software giant in more than a decade.

The bloc’s executive body, the European Commission, said it is concerned that Microsoft may be giving Teams an unfair advantage by not allowing customers to choose whether access to the product is included when they subscribe to the company’s productivity software. Microsoft may also have limited interoperability between its productivity suites and other products that compete with Teams, the commission said.

Microsoft said it respects the European Commission’s work on the case and takes its responsibilities very seriously. “We will continue to cooperate with the commission and remain committed to finding solutions that will address its concerns," a spokesman said.

The investigation stems from a 2020 complaint lodged by business messaging app Slack Technologies, which alleged that Microsoft was forcing companies to install Teams and blocking its removal. Slack is now owned by the business-software company Salesforce.

German videoconferencing company Alfaview filed a similar complaint last week, saying Microsoft’s bundling practices give its Teams software a competitive advantage that is “difficult to catch up without intervention by antitrust authorities."

Microsoft’s antitrust battles in both Washington and Brussels defined the early days of enforcement in the digital era. The U.S. government sued the company in the 1990s for allegedly using the dominance of its Windows software to squash competition in the market for internet browsers, in a case the two sides ultimately settled.

In Europe, antitrust complaints led to a long-running dispute with the regulator and a total of €2.2 billion, or about $ 2.45 billion, in fines against Microsoft between 2004 and 2013.

The new investigation into Microsoft’s bundling of its Teams software carries similarities to the company’s earlier antitrust disputes. Competition watchdogs in the 1990s and 2000s focused on Microsoft’s tying of two other services—the company’s Internet Explorer browser and its media player—with its Windows operating system.

In more recent years, Microsoft has largely stayed out of the sights of Washington and Brussels regulators. Authorities on both sides of the Atlantic turned their scrutiny toward a new wave of tech giants, including Meta Platform’s Facebook, Apple, Amazon.com and Alphabet’s Google, investigating them and others, mostly American firms, for a range of issues including tax, privacy and antitrust concerns.

Brusselsis also expanding its oversight of the tech industry more broadly, with new laws that will allow it to monitor some of the world’s biggest tech companies and enforce new competition and online content rules on a continuing basis.

Microsoft, though, hasn’t been a significant target for antitrust authorities since its earlier battles, though it has faced scrutiny over its deal making. Microsoft recently secured regulatory approval for its proposed acquisition of games giant Activision Blizzard in the EU. That deal is still being scrutinized in the U.S. and the U.K.

Opening a formal investigation is a key step in European competition probes. The commission can file formal charges if it finds evidence of wrongdoing, or it can drop the case.

Workplace collaboration software such as Teams and Slack grew in importance during the Covid-19 pandemic when many people began working from home. Teams, which has functions including messaging, videoconferencing and file sharing, has more than 300 million monthly active users, the company said earlier this year.

Alfaview, the German videoconferencing company, said last week that it filed its complaint after Microsoft had told the commission it was willing to commit to certain changes to avoid a formal investigation. The commitments that Microsoft had offered were insufficient to address Alfaview’s concerns, Alfaview said at the time.

A spokeswoman for the commission said it didn’t receive “any commitment proposal by Microsoft that would resolve our concerns." She also said that in any case, it is too early to discuss potential remedies before the commission has looked into the situation.

The commission must ensure that markets for remote communication and collaboration tools like Teams “remain competitive, and companies are free to choose the products that best meet their needs," European competition chief Margrethe Vestager said.

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