European Commission accuses Microsoft of breaching antitrust laws

Brussels (Brussels Morning) – The European Commission preliminarily argues Microsoft breached EU antitrust regulations by bundling Teams with Office 365 and Microsoft 365. It potentially limits competition in communication and collaboration tools.

The European Commission has notified Microsoft of its preliminary argument that Microsoft has breached EU antitrust regulations by tying its communication and collaboration product Teams to its popular productivity applications included in its suites for businesses Office 365 and Microsoft 365.

Microsoft, based in the US, is a multinational technology company presenting productivity and business software, cloud computing and personal computing. Teams is a cloud-based communication and partnership tool. It presents functionalities such as messaging, calling, video conferences, and file sharing, and brings together Microsoft’s and third-party workplace instruments and other applications.

Why is Microsoft Facing EU Antitrust Scrutiny?

According to the EU Commission, Suppliers of business application software, including Microsoft, are growingly distributing this software as software as a service (‘SaaS’), i.e., software hosted on the cloud infrastructure of the supplier’s choice. In regulation, cloud computing allows new market players to offer SaaS solutions and customers to utilise various software from different providers. However, Microsoft holds a suite-centric business model combining numerous types of software in a single offering. When Teams was projected, Microsoft included it in its widely utilised cloud-based productivity suites for business customers Office 365 and Microsoft 365.

How Does Teams Bundling Affect EU Market Competition?

The EU Commission preliminarily discovers that Microsoft is dominant worldwide in the market for SaaS productivity applications for professional use. The Commission is worried that, since at least April 2019, Microsoft has been connecting Teams with its core SaaS productivity applications, thereby limiting competition on the market for communication and cooperation products and upholding its market position in productivity software and its suites-centric cast from competing suppliers of individual software. 

How is Microsoft’s Teams Bundling Affecting the SaaS Market?

In certain, the Commission is concerned that Microsoft may have endowed Teams a distribution advantage by not giving customers the option of whether or not to acquire access to Teams when they subscribe to their SaaS productivity applications. This benefit may have been further aggravated by interoperability limitations between Teams’ competitors and Microsoft’s offerings. The manners may have prevented Teams’ rivals from contesting, and in turn innovating, to the 

liability of customers in the European Economic Area.

If ratified, these practices would violate Article 102 of the Treaty on the Functioning of the European Union (‘TFEU’), which restricts the abuse of a dominant market position.

After the Commission extended proceedings in July 2023, Microsoft introduced modifications in the way it distributes Teams. In certain, Microsoft started delivering some suites without Teams. The Commission preliminarily uncovers that these changes are insufficient to manage its concerns and that more modifications to Microsoft’s conduct are necessary to restore competition. 

The Commission unlocked its ongoing investigation on 27 July 2023 following an objection by Slack Technologies, Inc., which is now possessed by Salesforce, Inc. On 20 July 2023, the Commission acquired a second complaint regarding Teams by Alfaview GmbH, which presented similar concerns regarding the distribution of Teams. The Commission has approved extending proceedings against Microsoft also concerning Alfaview GmbH’s complaint. This Statement of Objections concerns both investigations.