The European Union on Tuesday accused Microsoft of violating competition law. In a formal statement of objection, the bloc said it suspects the software giant of abusing antitrust laws by bundling its real-time communications and collaboration tool, Teams, with popular productivity apps such as Office 365 and Microsoft 365, the cloud-based suites for businesses.
The EU launched an antitrust investigation into Microsoft's bundling of Teams in July 2023, two years after a complaint from Teams rival Slack.
Following this scrutiny, Microsoft announced a partial separation of Teams in late August last year, which ultimately took effect in April 2024. But the European Commission published the results of its preliminary investigation on Tuesday, noting that the changes Microsoft had made to its distribution of Teams were insufficient to address the concerns and that the company needed to go further.
“The Commission is concerned that since at least April 2019, Microsoft has tied Teams to its core SaaS productivity applications, thereby limiting competition in the market for communications and collaboration products and protecting its market position in productivity software and suite-centric models from competing suppliers of separate software,” the Commission said in a press release.
The EU suspects that Microsoft's bundling gave Teams a “distribution advantage” over rival products such as Slack. In the Commission's preliminary view, this may have been exacerbated by restrictions on interoperability between Teams' rival products and Microsoft's. “This conduct may have prevented Teams' competitors from competing, thereby stifling innovation and harming customers in the European Economic Area,” the Commission adds.
It's not just chat-based apps like Slack that could be affected. As we noted earlier this year, video conferencing companies like Zoom could also be affected by the way Microsoft has bundled Teams over the years. Teams is an all-in-one product that offers users messaging, voice and video calling, and meetings. In fact, since Slack filed its complaint, the company has received another complaint from German company alfaview GmbH, a video conferencing provider, the EU noted.
If Microsoft is officially found to have violated EU competition rules, it could be fined up to 10 percent of its annual worldwide revenue, and the EU can also impose remedies if it determines the measures are necessary to restore competition.
We've reached out to Microsoft for comment.
The appeal triggers a new phase in the investigation, requiring Microsoft to respond to the EU's preliminary findings, so the final outcome is uncertain, and there is no set timeline for EU enforcement authorities to complete their investigations.
According to a press release from the European Commission, a second complaint about Teams came from a German company called alfaview GmbH, which also expressed “similar concerns regarding the distribution of Teams.” The case now being launched against Microsoft will consider both the Slack and alfaview complaints.
Responding to the development in a statement, Sabastian Niles, president and chief legal officer of CRM giant Salesforce, which acquired Slack in late 2020, said: “The Statement of Objections issued by the European Commission today is a victory for customer choice and confirms that Microsoft's practices in Teams have harmed competition. We appreciate the Commission's thorough investigation of Slack's complaint and urge the Commission to move toward swift, binding and effective remedies to restore free and fair choice and foster competition, interoperability and innovation in the digital ecosystem.”
This report has been updated with comment from Slack.