Microsoft faces EU charges over ‘abusive’ bundling

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Brussels has accused Microsoft of illegally abusing its dominance in the business-software market at the expense of smaller rivals, following a complaint by U.S. competitor Slack at the height of the pandemic.

The European Commission said on Tuesday it found that Microsoft had been restricting competition since at least 2019 by selling its video-conferencing software Teams bundled with the company’s other popular office tools such as Office 365 and Microsoft 365.

“We are concerned that Microsoft may be giving itself an unfair advantage over competitors by integrating its communications product Teams into its popular productivity suites for businesses,” EU competition chief Margrethe Vestager said in a statement. “If confirmed, Microsoft’s conduct would be illegal under our competition rules.” The allegations announced Tuesday are only a “preliminary view,” meaning the commission has sent Microsoft a “statement of objection” and the company has 10 weeks after receiving all the details to respond.

Microsoft’s allegations come the same week the European Commission also accused it of breaking the EU’s new Digital Markets Act by not allowing app developers to communicate freely with their users. Over the past decade, the EU has become the de facto Big Tech regulator, forcing US giants to change the way they operate and imposing billions of dollars in fines.

In an attempt to placate Brussels, Microsoft began excluding Teams from some Office bundles in July last year. However, the Commission said today that those changes were insufficient and expressed concern about how easy it was to use the rival conferencing software with other Microsoft tools, known as interoperability.

“After separating Teams and taking initial interoperability steps, we appreciate the additional clarity provided today,” Microsoft vice president and president Brad Smith said in a statement shared with WIRED. He added that the company plans to find solutions to address the commission’s remaining concerns.

If Microsoft and the EU are unable to reach an agreement, the Commission has the power to impose fines of up to 10 percent of the company’s annual worldwide turnover, and may also impose remedial measures on the company.

The commission launched its investigation into Microsoft Teams after Slack complained in July 2020, when pandemic lockdowns caused fierce competition for remote workers relying on office software. “This is much bigger than Slack versus Microsoft,” Jonathan Prince, vice president of communications and policy at Slack, said at the time. “It’s representative of two very different visions for the future of the digital ecosystem, gateway versus gatekeeper.”

On Tuesday, Sebastian Niles, president and chief legal officer of Slack’s parent company Salesforce, described the European Commission’s position as “a victory for customer choice and confirmation” that Microsoft’s practices with Teams have harmed competition.

German video conferencing company AlphaView, which filed a complaint with the commission after Slack, also welcomed the decision. AlphaView CEO and founder Niko Fostiropoulos said in a statement that the measures Microsoft has taken so far to unbundle Teams have been ineffective. “Microsoft only offers a minimal discount of €2 ($2.10) to existing enterprise customers who choose to opt out of Teams in the overall package,” he said. “This does not provide a sufficient incentive to switch to another video conferencing service.”

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