The European Commission has accused Microsoft of illegally tying its chat and video app Teams with its popular Office package.
The recent antitrust complaint made by rival Slack (now owned by Salesforce) might result in a hefty fine for Microsoft if it is found guilty of these alleged antitrust breaches. The company faces a fine of 10% of its annual worldwide turnover.
The European Commission, the EU’s competition watchdog, stated that Teams had been given an ‘unfair advantage’ in distribution. The Commission also confirmed that Microsoft’s restrictions to prevent its competitors from working with Teams’ integrated software offerings have stifled rivals commercially.
EU antitrust chief Margrethe Vestager emphasised the importance of this case, stating, “Preserving competition for remote communication and collaboration tools is essential as it also fosters innovation on these markets.”
This isn’t Microsoft’s first encounter with EU antitrust regulators. Two decades ago, it paid 2.2 billion euros in fines for such tying practices and other offences. There are some similarities between the recent case and those older allegations, but it also highlights the fight that tech behemoths have been waging for decades to balance product collaboration and competition.
Microsoft has responded to these concerns, having already taken action in several areas, including the global unbundling of Teams from Office and enhancing compatibility with its products. Nevertheless, the Commission has issued an official warning that these steps are not sufficient and that more extensive modifications are necessary to restore competition.
Sources familiar with the matter suggest that the EU wants Microsoft to sell Office without Teams at a lower price than what has been announced. Competitors are also calling for clearer interoperability terms and more incentives for users to switch to alternative platforms.
Microsoft’s president, Brad Smith, reiterated the company’s willingness to address these issues: “Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the Commission’s remaining concerns.”
Industry watchers and stakeholder reactions
The case is being watched by industry stakeholders and competitors. Salesforce president and chief legal officer Sebastian Niles pressed the Commission to take swift action on a ‘binding and effective remedy’ to bring freedom of choice back to the market. Another complainant, the German rival Alfaview, welcomed the Commission’s action against Microsoft.
Teams, a free addition to Office 365 in 2017 that effectively displaced Skype for Business, became incredibly popular during the pandemic. Separately from the outbreak, competitors claim that Microsoft secured such deals by bundling the product with Office and offering a market-leading video conferencing solution.
This case is part of broader scrutiny of giant tech companies and their business practices. It also exposes the difficult trade-offs between combining product elements to enhance user welfare while preserving meaningful competition in fast-changing digital markets.
It will be crucial to see how Microsoft continues to navigate these regulatory challenges as the investigation unfolds and what remedies will be implemented to reshape the competition in such an undeniably critical market as productivity software. However, the outcome of this case could have huge, precedent-setting consequences for how tech companies package their products and services in the future.
See also: Microsoft unveils DirectSR to unify super resolution technologies
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