EU accuses Microsoft of competition violations over Teams bundling

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

The EU launched an antitrust investigation into Microsoft’s bundling of Teams almost a year ago, in July 2023 – two years after Teams’ rival company Slack complained.

Microsoft followed the investigation by announcing a partial unbundling of Teams in late August last year. However, announcing the results of its preliminary investigation on Tuesday, the European Commission said it suspected that the changes Microsoft made to its distribution of Teams last year were insufficient to address its concerns and that the tech giant needed to go further.

“The Commission is concerned that, since at least April 2019, Microsoft Teams with its core SaaS productivity applications, thereby limiting competition in the market for communications and collaboration products and defending its market position “Productivity software and its suites-centric model are being differentiated from competing suppliers of individual software,” the Commission wrote in a press release.

The EU suspects that Microsoft’s bundling has given Teams a “distribution advantage” over rival products such as Slack. The Commission’s preliminary view is also that this may have been exacerbated by interoperability limitations between Teams’ competitors and Microsoft’s offerings. “This conduct may have prevented Teams, It further added: “We are preventing rivals from competing and innovating, in turn, causing harm to consumers in the European Economic Area.”

Microsoft could be fined up to 10% of its annual global turnover if a formal finding of breach of EU competition rules is made. The EU can also impose measures if it believes steps are needed to restore competition.

Microsoft has been contacted for comment.

The statement of objections begins 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 investigation.

The Commission’s press release said it had received a second complaint about Teams, made by a German company called AlphaView GmbH, which it said had “raised similar concerns about the distribution of Teams”. The complaints from both Slack and AlphaView will now be considered in the proceedings initiated against Microsoft.

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