The European Commission has initiated proceedings against Microsoft, alleging unfair practices related to bundling Teams with Office 365.
- These are the most severe charges since Microsoft’s 2013 fine of €561 million.
- User numbers for Teams surged during the pandemic, reaching 300 million in 2023 from 20 million in 2019.
- Competitors like Slack and Alfaview have lodged complaints, sparking the antitrust inquiry.
- Microsoft has made some changes but regulators find them insufficient.
The European Commission has announced serious antitrust charges against Microsoft, accusing the tech giant of unfairly bundling its Teams app with Office 365. This move allegedly disadvantages competitors who offer standalone messaging platforms, such as Slack and Alfaview. These accusations mark the most severe charges against Microsoft since 2013 when it was fined €561 million for failing to promote alternative browsers to Internet Explorer.
User engagement with the Teams platform surged significantly during the pandemic, with active users escalating from 20 million in 2019 to 300 million by 2023, according to Statista. The European Commission’s preliminary findings assert that Microsoft holds a dominant position in the global ‘software as a service’ (SaaS) market and that its bundling practices have provided an unfair distribution advantage, as customers were mandated to acquire Teams alongside Office 365 subscriptions.
Margrethe Vestager, the European Commission’s executive vice-president for competition policy, stated, ‘Preserving competition for remote communication and collaboration tools is essential as it also fosters innovation in these markets. If confirmed, Microsoft’s conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns.’
Despite preemptive modifications earlier this year, where Microsoft unbundled Teams from some software packages sold in Europe, regulators judged these changes as ‘insufficient,’ calling for more substantial adjustments. Brad Smith, Microsoft’s vice-chair and president, responded, ‘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.’
The antitrust inquiry was initiated last July following complaints from competitors such as Slack Technologies and German video conference provider Alfaview. Niko Fostiropoulos, CEO of Alfaview, welcomed the Commission’s preliminary findings, stating that Microsoft’s countermeasures were inadequate as they continued to bundle Teams with essential Office 365 components, and mentioned that direct negotiations with Microsoft failed to alleviate the concerns.
The outcome of this case will have significant implications for Microsoft and the broader SaaS market.
