EU says Microsoft bundling Teams breaches competition rules

25 Jun 2024

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Margrethe Vestager said Microsoft may be giving Teams an ‘undue advantage’ over competitors. The Office giant now has a chance to respond.

The EU has accused Microsoft of breaching antitrust rules for bundling Teams with Office 365 and Microsoft 365 productivity apps.

Following a preliminary investigation that began nearly a year ago, the European Commission said today (25 June) that it has concluded that Microsoft is dominant worldwide in the market for SaaS (software-as-a-service) productivity apps for professional use. This means that bundling Teams with core productivity apps available on Office 365 and Microsoft 365 restricts competition in the market for communication and collaboration products and defends its market position in productivity software.

The Commission is particularly concerned that Microsoft may have granted Teams a “distribution advantage” by not giving customers the choice whether to acquire access to Teams when they subscribe to their SaaS productivity applications.

“This advantage may have been further exacerbated by interoperability limitations between Teams’ competitors and Microsoft’s offerings,” the Commission wrote in a statement. “The conduct may have prevented Teams’ rivals from competing, and in turn innovating, to the detriment of customers in the European Economic Area.”

Margrethe Vestager, who is executive VP of EU competition policy, said that the Commission is concerned 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,” Vestager said. “If confirmed, Microsoft’s conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns.”

If, after Microsoft puts up a defence, the Commission finds sufficient evidence of an infringement, it can adopt a decision prohibiting the conduct and fine the company up to 10pc of its annual worldwide turnover.

The EU sent Microsoft a legally binding request for information about Bing’s generative AI features last month, based on suspicions that Bing may have breached the Digital Services Act due to risks linked to generative AI.

Around the same time, the UK’s Competition and Markets Authority (CMA) opted not to investigate Microsoft’s partnership with the start-up Mistral AI. Microsoft backed the French unicorn earlier this year as part of a “multi-year partnership” to boost its Azure cloud computing platform with AI. But the CMA had concerns around whether the agreements between the two companies qualified as a merger deal.

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Vish Gain is a journalist with Silicon Republic

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