Microsoft Faces EU Scrutiny Over Teams Integration
The European Commission has accused Microsoft of violating European competition rules by integrating its Teams application with Office 365 and Microsoft 365 products. This preliminary conclusion follows an investigation initiated in July 2023, reminiscent of a previous case against Microsoft for bundling Internet Explorer with Windows. The Commission argues that linking Teams to its productivity suites restricts competition in the business applications market and cloud computing.
Concerns Over Market Dominance and Interoperability
According to the Commission, Microsoft's move to bundle Teams with its popular productivity packages provides an undue advantage, restricting customer choice and limiting competition. Margrethe Vestager, the Vice President of the Community Executive in charge of Competition Affairs, emphasized the importance of protecting free competition, stating that Microsoft's conduct could be illegal under EU competition rules. The Commission's preliminary findings suggest a 'distribution advantage' for Teams and note interoperability limitations with competing products.
Microsoft has already taken steps to address these concerns by unbundling Teams from its Office and Microsoft 365 packages starting October 1, 2023, in the European Union. However, the Commission considers these measures insufficient and calls for further modifications to restore competition. The American tech giant, chaired by Brad Smith, has expressed its willingness to find solutions to the Commission's concerns.
The ongoing scrutiny of Microsoft's practices comes amidst broader regulatory attention on big tech companies. European regulators are also examining Microsoft's link with OpenAI and its cloud computing licensing agreements. The company faces potential fines of up to 10% of its annual global turnover if found guilty of violating competition rules. The Commission's statement of objections allows Microsoft to defend itself, but the final decision is yet to be made.
- The European Commission's investigation into Microsoft's practices began after a complaint from Slack, now owned by Salesforce, in 2020. Slack accused Microsoft of illegally bundling Teams with its Office suite, forcing its installation for millions of users, blocking its removal, and obscuring the real cost for businesses.
- This recent scrutiny is part of a broader effort by public institutions to regulate big technology companies more rigorously. European regulators are also investigating Microsoft's $13 billion link with OpenAI and its cloud computing licensing agreements, which competitors deem unfair.
- Despite Microsoft's attempts to remedy the situation by unbundling Teams, the Commission's preliminary findings indicate that more significant changes are needed to ensure fair competition in the market. The final decision will depend on Microsoft's response to the Commission's concerns and any subsequent negotiations.
