Global: EU Antitrust Launches Investigation into Microsoft’s Teams and Office Bundle

On Thursday (July 27, 2023), Microsoft faced an antitrust investigation from the European Union (EU) regarding the bundling of its chat and video app, Teams, with its Office product. This puts the tech giant at risk of incurring a substantial fine.

Over the past decade, Microsoft has already been subjected to 2.2 billion euros ($2.5 billion) in EU antitrust fines for practices that violated EU competition rules, including the bundling of two or more products together. Since then, the company has taken a more conciliatory approach with the European Commission.

The investigation by the European Commission was initiated following a complaint by Salesforce-owned workspace messaging app, Slack, in 2020. Despite Microsoft’s offer of remedies, it failed to address the concerns of the EU competition enforcer.

Teams, which was added to Office 365 in 2017 to eventually replace Skype for Business, gained immense popularity during the pandemic, particularly for its video conferencing capabilities.

The European Commission aims to expedite the case and is planning to issue formal charges against Microsoft in the autumn unless the company improves its concessions, according to a source familiar with the matter.

The EU competition enforcer expressed concerns that Microsoft might be leveraging its market position in productivity software to restrict competition in the European communication and collaboration products market.

EU antitrust chief Margrethe Vestager stated, “Remote communication and collaboration tools like Teams have become indispensable for many businesses in Europe. We must, therefore, ensure that the markets for these products remain competitive, and companies are free to choose the products that best meet their needs.”

Microsoft’s spokesperson said that the company would continue to cooperate with the European Commission and is committed to finding solutions to address their concerns.

Earlier this month, Reuters reported that the EU antitrust watchdog was preparing to launch a probe after Microsoft declined to offer more significant price cuts on its Office without Teams.

The European Commission hopes that a price differential between Office with Teams and Office without the app will promote fair competition with rivals and provide consumers with more choices, according to sources familiar with the matter.

German rival alfaview, which recently filed a complaint similar to Slack’s with the EU executive, welcomed the EU investigation. Its CEO and founder, Niko Fostiropoulos, stated, “With our complaint, we want to make clear that this is not about a fight between two US tech giants but about the protection of innovations of all kinds.”

EU fines for antitrust violations can be as high as 10% of a company’s global turnover.