European officials have kickstarted an investigation to determine whether Microsoft’s practice of bundling Teams and Office 365 is anti-competitive.

The move comes after UCaaS rival Slack – now owned by Salesforce – made a formal complaint, accusing Microsoft of illegally side-stepping the competition.

Announcing the probe on Thursday, the European Commission stated it “is concerned that Microsoft may be abusing and defending its market position.

“Microsoft may grant Teams a distribution advantage by not giving customers the choice on whether or not to include access to that product when they subscribe to their productivity suites and may have limited the interoperability between its productivity suites and competing offerings.

These practices may constitute anti-competitive tying or bundling and prevent suppliers of other communication and collaboration tools from competing, to the detriment of customers in the European Economic Area (‘EEA’).

Under Article 102 of the Treaty on the Functioning of the European Union, the EU could consider such actions as breaches of their anti-competition rules.

Will History Repeat Itself?

Microsoft will be familiar with the Treaty on the Functioning of the European Union, having fallen into hot water with the Commission in 2013.

Then, it was found guilty of breaching a commitment to give European customers a choice of which web browser they use, receiving a $730MN fine.

Ten years later, Microsoft faces somewhat similar allegations, with Salesforce arguing that it failed to offer users the choice to mix and match services.

Wishing to avoid history repeating itself, Microsoft has pledged to cooperate with the Commission.

Indeed, a spokesperson for the tech giant told CNN: “We respect the European Commission’s work on this case and take our own responsibilities very seriously.

We will continue to cooperate with the Commission and remain committed to finding solutions that will address its concerns.

Earlier this year, reports suggested that Microsoft would no longer automatically bundle Teams with Office 365 in an attempt to swerve such a formal investigation.

Yet, Zeus Kerravala, Founder and Principal Analyst at ZK Research, pinpointed the critical issue with that strategy in a CX Today story. “It’s not enough. Microsoft is talking about doing this AFTER it has reached a monopoly-like share,” he said.

Many agree with this sentiment and suggest that – should the Commission find Microsoft guilty – these actions and a fine may not be enough to readdress the balance.

EU Lawmaker: Effective Remedies Are Required

EU Lawmaker Stéphanie Yon-Courtin wrote to the Commission earlier this month, noting that Microsoft’s dominant position in the collaboration space has grown since Slack filed its complaint in July 2020.

In doing so, Yon-Courtin called for more effective remedies to discourage further breaches, stating:

As Microsoft has been repeatedly found to have violated EU competition law, can the Commission confirm that it is fully aware of the need to put in place effective remedies that are different from those used in the past in other digital antitrust cases?

Those remedies could include a much weightier fine that reflects Microsoft’s UCaaS dominance and 300MN monthly active users.

However, other actions may be more targeted. One potential option is to not only ensure Microsoft unbundles the products but that it also provides a migration path to move the data in Teams to competing products.

Making such moves a requirement for all SaaS vendors operating in the EU may prevent similar breaches in the future.

As Kerravala previously stated: “Only by making it easy to switch platforms will we find out who has the best product.”

 

 



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