EU accuses Microsoft of competition breach over Teams bundling

The European Union accused Microsoft of breaching competition rules Tuesday. In a formal statement of objections, the bloc said it suspects the software giant of abusing antitrust rules by bundling its real-time comms and collaboration tool, Teams, with popular productivity apps, including its cloud-based suites for businesses Office 365 and Microsoft 365.

The EU opened an antitrust probe of Microsoft's bundling of Teams just under a year ago, back in July 2023 -- two years after a complaint by Teams rival Slack.

Microsoft followed the scrutiny by announcing a partial unbundling of Teams in late August last year (which it finally implemented in April 2024). However, announcing the results of its preliminary investigation Tuesday, the European Commission said it suspects the changes Microsoft made to Teams' distribution were insufficient to address its concerns and the tech giant needs to go further.

"The Commission is concerned that, since at least April 2019, Microsoft has been tying Teams with its core SaaS productivity applications, thereby restricting competition on the market for communication and collaboration products and defending its market position in productivity software and its suites-centric model from competing suppliers of individual software," the Commission wrote in a press release.

The EU suspects Microsoft's bundling has given Teams a "distribution advantage" versus rival products, such as Slack. The Commission's preliminary view is also that this may have been further exacerbated by interoperability limitations between Teams' competitors and Microsoft's offerings. "The conduct may have prevented Teams' rivals from competing, and in turn innovating, to the detriment of customers in the European Economic Area," it adds.

It's not only chat-based apps like Slack that might be impacted. As we pointed out earlier this year, video conferencing companies like Zoom have also potentially been impacted over the years by how Microsoft has bundled Teams -- which is an all-in-one product offering messaging, voice and video calls, and conferencing to users. Indeed, since Slack filed its complaint, the EU noted, it's received another complaint from German company alfaview GmbH, a videoconferencing provider, which it said raised "similar concerns regarding the distribution of Teams." The proceedings it has now opened against Microsoft will consider both Slack's and alfaview's complaints.

A formal finding of a breach of EU competition rules could result in Microsoft being fined up to 10% of its annual worldwide turnover. The bloc could also impose remedies if it decides steps are required to restore competition.

Microsoft has been contacted for comment.

The statement of objections opens a new phase in the investigation, in which Microsoft will be invited to respond to the EU's preliminary findings so the final outcome cannot be predicted. There is also no fixed timeline for EU enforcers to complete their investigations.

Responding to the development in a statement, Sabastian Niles, president and chief legal officer at Salesforce -- the CRM giant that acquired Slack at the end of 2020 -- said: “The Statement of Objections issued today by the European Commission is a win for customer choice and an affirmation that Microsoft’s practices with Teams have harmed competition. We appreciate the Commission’s thorough investigation of Slack's complaint and urge the Commission to move towards a swift, binding, and effective remedy that restores free and fair choice and promotes competition, interoperability, and innovation in the digital ecosystem.”

This report was updated with comment from Slack.

https://techcrunch.com/2024/04/01/as-microsoft-unbundles-teams-it-might-not-have-the-impact-on-slack-you-think https://techcrunch.com/2023/07/27/microsoft-teams-antitrust-probe-eu