European Union launches antitrust investigation into Microsoft’s bundling of Teams

The European Union (EU) has initiated an antitrust investigation concerning Microsoft’s practice of bundling its collaboration and communication software, Teams, with its popular cloud-based productivity suites for businesses, Office 365 and Microsoft 365.

This investigation comes after rival company Slack lodged a complaint with the EU, alleging that Microsoft was unfairly tying Teams with its productivity suites, thereby restricting competition in the European Economic Area (EEA) for communication and collaboration products.

“The Commission is concerned that Microsoft may be abusing and defending its market position in productivity software by restricting competition in the European Economic Area (‘EEA’) for communication and collaboration products,” European Commission said while announcing the probe. 

“In particular, the Commission is concerned that Microsoft may grant Teams a distribution advantage by not giving customers the choice on whether or not to include access to that product when they subscribe to their productivity suites and may have limited the interoperability between its productivity suites and competing offerings,” it added. 

Microsoft acknowledged the European Commission’s action and expressed its commitment to cooperate with the investigation. 

“We respect the European Commission’s work on this case and take our own responsibilities very seriously. We will continue to cooperate with the Commission and remain committed to finding solutions that will address its concerns,” Microsoft reportedly said. 

Background of the complaint

In July 2020, Slack publicly accused Microsoft of illegally tying Teams to its dominant Office productivity suite. Slack claimed that Microsoft had forcibly installed Teams for millions of users, made it challenging to remove, and obscured its true cost to enterprise customers.

Microsoft countered the allegations, citing the surge in Teams’ adoption during the COVID-19 pandemic due to increased demand for video conferencing and digital communication tools.

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The EU’s approach to regulating digital giants is evolving, with the introduction of the Digital Markets Act (DMA) providing additional antitrust enforcement powers.

The DMA targets powerful digital intermediaries or “gatekeepers” and imposes upfront obligations and restrictions on their core platform services to prevent self-favoring practices like bundling or tying.

Microsoft’s business could fall under the scope of the DMA, and the regulation might apply to areas relevant to Slack’s complaint, such as communications and cloud services.