Microsoft is allegedly set for an EU antitrust probe into its Teams and Office bundling after its remedies to avoid the investigation were considered inadequate, as first reported by Reuters.
EU regulators had been in discussions with Microsoft after its rivals Slack lodged an official complaint in 2020, claiming that Microsoft’s bundling of Office and Teams was uncompetitive.
In April, Microsoft offered to decouple Teams from Office to avoid the formal EU investigation, meaning that when prospective customers bought Office in the future, they would have the choice of whether also to purchase Teams or not. Microsoft recently offered to reduce the price of its Office product without Teams.
However, discussions around concessions have reportedly reached a roadblock. The European Commission had sought a price point which provided a more fairly competitive product for consumers and Microsoft’s rivals. Reuters’ sources said that the European Commission and Microsoft were some distance apart in agreeing on a price reduction between Office without Teams and Office with the UC and collaboration platform, resulting in a breakdown in negotiations.
A Microsoft spokesperson told Reuters:
We continue to engage cooperatively with the Commission in its investigation and are open to pragmatic solutions that address its concerns and serve customers well.”
If found in breach of EU antitrust rules, Microsoft could be fined up to 10 percent of its annual turnover.
Microsoft could still improve its remedy to avoid the Commission’s probe before it formally begins.
How did we get Here?
Microsoft added Teams to Office 365 in 2017 to replace Skype for Business, while Microsoft has been in discussions with EU regulators about their Teams and Office bundling since the start of the pandemic in 2020.
As remote and hybrid working became the new normal, the UC and collaboration industry boomed, with Teams and Slack as two of the most prominent platforms.
Acquired by Salesforce later in 2020, Slack filed an official complaint about the market dominance of Teams’ bundling with Office. David Schellhase, general counsel at Slack, said, “We’re asking the EU to be a neutral referee, examine the facts and enforce the law.”
Following Slack’s complaint, EU watchdogs began investigating Microsoft’s dominance of the collaboration space in October 2021. The pressure on Microsoft grew when, a month later, 30 European software firms united to take on Microsoft, describing the tech giant’s business practices as anti-competitive for integrated OneDrive and Teams with Windows.
In December 2022, Reuters reported that Microsoft had been looking to settle with the European Commission over its antitrust concerns. Earlier this year, Microsoft offered to reform its cloud computing practices in a further effort to resolve antitrust complaints and avoid an EU probe.
Microsoft’s History with Antitrust
Microsoft has had regulatory issues with the EU Commission in the past. In 2008, Microsoft was accused of using its dominant market position in web browsers to bundle Internet Explorer with Windows. It settled in 2009, promising to provide users with a selection of rival browsers. However, in 2013 Microsoft was fined €561 million for failing to abide by that promise.
Microsoft has also been seeking regulatory approval for its $69 billion acquisition of videogame publisher Activision Blizzard, a move which rival Sony has complained about as being uncompetitive. The acquisition is currently under scrutiny from the United States Federal Trade Commission (FTC) and the United Kingdom Competition and Markets Authority (CMA).
Possibly its most famous legal battle took place around the turn of the millennium in the U.S.A. when the business was initially broken up into two separate companies. However, the ruling was overturned. Microsoft and the U.S. Department of Justice settled in 2001, agreeing that Microsoft would share APIs with third parties and allow PC manufacturers to install non-Microsoft software on their hardware.
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