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EU accuses Microsoft of violating competition law with Teams bundling

The European Union accused Microsoft of breaking competition rules on Tuesday. In a formal statement of objections, the bloc said it suspected the software giant of abusing antitrust rules by bundling its real-time communication and collaboration tool Teams with popular productivity apps, including its cloud-based suites Office 365 and Microsoft 365 for businesses.

The EU launched an antitrust investigation into Microsoft’s Teams bundling practices less than a year ago (July 2023) – two years ago, Teams competitor Slack filed a complaint.

Microsoft announced a partial spinoff of Teams in late August to respond to the scrutiny. However, the European Commission said in announcing its preliminary findings on Tuesday that it suspected that changes Microsoft made to the distribution of Teams last year were not sufficient to address its concerns and that the tech giant needed to take further action.

“The Committee is concerned that, since at least April 2019, Microsoft has team Its core SaaS productivity applications, thereby limiting competition in the communications and collaboration product market and defending its position in “Productivity software, with its suite-centric model, can serve as a shield against competing vendors of individual software,” the commission wrote in a press release.

The EU suspects that Microsoft’s bundling gives Teams a “distribution advantage” over competing products such as Slack. The European Commission’s preliminary opinion also believes that interoperability restrictions between Teams competitors and Microsoft products may have further exacerbated the situation. “Such behavior may have hindered Teams’ competition and, therefore, innovation by competitors, to the detriment of customers in the EEA,” it added.

If Microsoft is formally found to have broken EU competition rules, it could be fined up to 10% of its annual global turnover. Remedies could also be imposed if the EU decides steps need to be taken to restore competition.

We’ve reached out to Microsoft for comment.

The statement of objections opens a new phase of the investigation, in which Microsoft will be invited to respond to the EU’s preliminary findings, so the final outcome is unpredictable. There is no fixed timeline for EU enforcers to complete their investigation.

The Commission’s press release noted that it had received a second complaint about Teams from a German company called alfaview GmbH, which the commission said raised “similar concerns about the distribution of Teams.” The Commission’s current case against Microsoft will consider both the Slack and alfaview complaints.

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