EU Releases Its Initial Findings on Teams’ Potential Monopoly. It's Bad News for Microsoft

  • Regulators began the investigation was in July 2023 in response to complaints from Slack.

  • The European Commission’s preliminary stance indicates that Microsoft might have abused its dominant position.

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Looking back, you might recall that the European Commission started investigating Microsoft last year. This investigation, which took place 15 years after the Internet Explorer antitrust case, aimed to determine whether the tech giant was leveraging its dominant position with Microsoft Teams, its productivity and business communication tool. 

Almost a year later, the EC has released its initial opinion, where it determines that yes, Microsoft gave its own tool an advantage over its competitors. But this isn’t the final verdict. However, it does reflect the Commission’s stance. The ball is now in Microsoft’s court.

Some context. On July 27, 2023, the European Commission launched an investigation against Microsoft and its software, Teams, following a complaint from Slack, which is responsible for the team messaging app of the same name, for potential anti-competitive practices. The issue arose because Microsoft included Teams in Office 365 by default, meaning it was part of the same suite of tools as Word, PowerPoint, and Excel.

The investigation’s conclusion. In Monday's statement, the EC said it “preliminarily finds that Microsoft is dominant worldwide in the market for SaaS productivity applications for professional use.”

The European body added that it was concerned that “Microsoft may have granted Teams a distribution advantage by not giving customers the choice whether or not to acquire access to Teams when they subscribe to its SaaS productivity applications.” The EC also believes this conduct may have prevented “Teams’ rivals from competing, and in turn innovating, to the detriment of customers in the European Economic Area.”

In the words of Margrethe Vestager, the European Commissioner for Competition:

“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. And preserving competition for remote communication and collaboration tools is essential as it also fosters innovation on these markets. If confirmed, Microsoft’s conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns.”

Microsoft’s response. Days after the EC made its investigation public, Microsoft announced that it was going to separate Teams from Office 365, making both products available for individual purchase. However, European regulators deemed this action “insufficient to address its concerns” and stated that “more changes in Microsoft’s conduct are necessary to restore competition.”

According to the European Commission, Microsoft’s Teams separation from Office 365 wasn’t enough.

The ball is in Microsoft’s court. Now, it’s the company’s turn to respond to the European body’s concerns. There’s no deadline for the investigation’s conclusion, but if it determines that Microsoft has abused its dominant position, the tech giant could face a fine of up to 10% of its annual global revenue and as well as additional measures to resolve the matter.

Microsoft president Brad Smith had this to say in regard to the investigation: “Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided [on Monday] and will work to find solutions to address the Commission’s remaining concerns.”

Image | Xataka

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