European Union opens competition investigation against Microsoft over Teams

The European Union announced on Thursday that it is opening an antitrust investigation against Microsoft over the bundling of Office and Teams.

The European Commission, the EU's executive arm, is concerned that the move could be cutting out competitors. The popularity of online virtual meetings has surged since the coronavirus pandemic.

“Remote communication and collaboration tools like Teams have become indispensable for many businesses in Europe,” EU antitrust chief Margrethe Vestager said.

“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.

“This is why we are investigating whether Microsoft’s tying of its productivity suites with Teams may be in breach of EU competition rules,” she said.

Microsoft, a US tech giant, bundles Teams with its cloud-based Office 365 and Microsoft 365 suites.

Teams offer functionalities such as messaging, calling, video meetings and file sharing. The platform brings together Microsoft's and third-party workplace tools and other applications.

Rival communications platforms include Zoom, Google Meet, and Cisco Webex.

Microsoft has racked up 2.2 billion euros ($2.5 billion) in EU antitrust fines in the previous decade for practices in breach of EU competition rules, including tying or bundling two or more products together.

The commission said that Microsoft may be restricting competition in Europe for communication and collaboration products. This may constitute “anticompetitive tying or bundling and prevent suppliers of other communication and collaboration tools from competing”.

Such practices would be detrimental to European customers and if proven, would breach EU competition rules, a statement from the commission added.

The commission said that it would carry out an in-depth investigation “as a matter of priority.” There is no deadline for bringing an antitrust investigation to an end.

The investigation comes three years after American workspace messaging app Slack Technologies submitted a complaint against Microsoft, alleging that Microsoft illegally tied Teams to its dominant productivity suites.

Slack was acquired by Salesforce, the leader in cloud-based customer management software, in a $27.7 billion deal in 2021. Like many firms, the company has been hit by a slowdown in tech spending after the pandemic – announcing plans to cut about 10 per cent of its staff after nearly tripling in size over the past four years.

A Microsoft spokesperson said: “We respect the European Commission's work on this case and take our own responsibilities very seriously.

"We will continue to co-operate with the Commission and remain committed to finding solutions that will address its concerns.”

Reuters reported earlier this month that the EU antitrust watchdog was set to open a probe after Microsoft declined to offer bigger price cuts on its Office without Teams.

The commission hopes a price differential between Office with Teams and Office without the app will ensure a level playing field with rivals and give consumers more choice, people familiar with the matter have told Reuters.

German rival alfaview last week filed a complaint similar to Slack's with the EU executive.