The European Commission 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. rival Slack at the height of the pandemic.
The European Commission said on Tuesday it had found that Microsoft had restricted competition since at least 2019 by bundling its videoconferencing software, Teams, with its other popular office tools, Office 365 and Microsoft 365.
“We are concerned that Microsoft is giving its competitors an unfair advantage by linking its communications product, Teams, with its popular enterprise productivity suite,” EU competition chief Margrethe Vestager said in a statement. “If this is the case, Microsoft’s actions would violate competition law.” The charges announced on Tuesday are only a “preliminary opinion,” meaning the Commission has sent a “letter of objection” to Microsoft, and the company has 10 weeks to respond after receiving all the details.
The charges against Microsoft came the same week that the European Commission filed suit against Apple, accusing it of violating the EU’s new digital markets law by not allowing app developers to communicate freely with users. Over the past decade, the EU has become the de facto regulator for big tech companies, forcing the U.S. giants to change the way they do business and levying billions of dollars in fines.
Microsoft began removing Teams from some of its Office bundles last July in a bid to appease Brussels, but the European Commission said today that those changes didn’t go far enough, expressing concerns about how easy it is to use rival conferencing software alongside other Microsoft tools – known as interoperability.
“We appreciate the further clarity provided today as we unbundle Teams and take initial steps on interoperability,” Brad Smith, Microsoft’s vice chairman and president, said in a statement shared with WIRED. The company will work to find a solution to address the committee’s remaining concerns, he added.
If Microsoft and the EU cannot reach an agreement, the European Commission will have the power to impose fines of up to 10% of the company’s annual worldwide turnover and could impose relief measures on the company.
The committee began investigating Microsoft Teams after receiving a complaint from Slack in July 2020, as pandemic lockdowns intensified competition for remote workers who turned to office software. “This is much bigger than Slack versus Microsoft,” Jonathan Prince, Slack’s vice president of communications and policy, said at the time. “This is a proxy for two very different philosophies for the future of the digital ecosystem: gateway versus gatekeeper.”
Sabastian Niles, president and chief legal officer of Slack’s parent company Salesforce, called the European Commission’s position “a victory for customer choice and an affirmation that Microsoft’s practices with Teams have harmed competition.”
German videoconferencing company Alfaview, which followed Slack in filing a complaint with the commission, also welcomed the decision. Steps Microsoft has taken so far to unbundle Teams have been ineffective, Alfaview CEO and founder Niko Fostiropoulos said in a statement. “Microsoft is only offering a small discount of €2 ($2.10) to existing business customers who opt out of Teams in the overall package,” he said. “This is not enough motivation to switch to another videoconferencing service.”
