EU to Microsoft: Teams Bundling in Violation of Antitrust Rules

Microsoft is the latest US Big Tech firm to find itself in the crosshairs of European regulators as the EU Commission on Tuesday claimed the bundling of Microsoft Teams with Microsoft 365 violates antitrust rules.

The commission sent a statement of objections to Microsoft, charging that the company’s dominance with its cloud-based Office 365 and Microsoft 365 discourages competition for other video conferencing apps.

The EU opened its investigation after Salesforce-backed competitor Slack filed a complaint in July 2023, followed by another complaint from German videoconferencing software firm alfaview GmbH.

Margrethe Vestager, the EU Commission’s executive vice president in charge of competition policy, said in a statement, “We are concerned that Microsoft may be giving its own communication product Teams an undue advantage over competitors, by tying it to its popular productivity suites for businesses … If confirmed, Microsoft’s conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns.”

In a statement sent to InformationWeek, Microsoft Vice Chair and President Brad Smith said, “Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity today and will work to find solutions to address the commission’s remaining concerns.”

Related:EU Says Apple Broke DMA Rules, Deepens Probe

Alfaview CEO and founder Niko Fostiropoulos in a statement lauded the EU’s stance on Teams. He said Microsoft’s move to unbundle Teams from Office in Europe last year did not go far enough. “The partial unbundling carried out by Microsoft is insufficient in many respects and does not create a fair competitive environment,” he said.

Big Tech Crackdown

The commission’s charge against Microsoft is just the latest in Europe’s effort to regulate large tech companies. The Digital Services Act (DSA) and Digital Markets Act (DMA) passed last year target “gatekeepers” and “very large online platforms” and have already ensnared X, Meta, Amazon, Apple, and others with probes that could lead to billions of dollars in fines. The recently passed EU AI Act is now the most comprehensive set of regulations providing guardrails for artificial intelligence.

The EU’s tough stance on mostly American tech firms has drawn criticism from lawmakers and the US Chamber of Commerce. Jordan Heiber, who leads the US Chamber’s privacy and data flow policy portfolio and Zach Helzer, senior director of the Chamber’s UK Business Council, wrote that the “dizzying array” of regulations is hurting European consumers and stifling innovation.

Related:EU Presses Mostly US Tech Firms for DSA Compliance

“The lightning-speed in which digital technology is transforming the global economy is bumping up against Europe’s heavy-handed approach to regulation -- posing a threat to innovation, competition, and economic growth,” according to the letter. “Many of the EU policies … also discriminate again US companies operating in the European market. Like other companies doing business internationally, these American firms already navigate complex regulations worldwide and now face additional burdens when conducting business across the Atlantic.

The EU has become the de facto global regulator for data privacy with its General Data Protection Regulation (GDPR) that has become the gold standard for data privacy governance and influences companies’ policies globally. As the block ramps up actions under its DMA and DSA rules, its regulatory reach is growing, drawing both praise and scorn.

Sabastian Niles, president and chief legal officer at Salesforce in a statement said the EU’s action was welcome, saying the statement was “a win for customer choice and an affirmation that Microsoft’s practices with Teams have harmed competition.”