Microsoft to face EU competition investigation over Teams and Office bundling

Microsoft will next week face its first formal European Union (EU) antitrust investigation in 15 years over claims the US tech giant is unfairly tying its video conferencing app Teams with its popular Office software.

The push from the European Commission, the EU’s executive body, comes after Microsoft’s concessions to appease competition concerns proved insufficient, four people with direct knowledge of the EU’s thinking said on Monday.

Once the investigation gets under way, Microsoft could face formal charges as early as the autumn, two of the people added.

The commission’s decision to open an investigation signals Brussels’ determination to clamp down on practices by large tech companies that could stifle competition. Apple, Google and Meta are all facing probes for alleged anticompetitive behaviour.

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In April, the Financial Times reported Microsoft would stop forcing its customers to install Teams automatically on their devices after rival Slack complained in 2020 that the practice of “bundling” the two services together broke EU competition laws.

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But the talks between the commission and Microsoft stalled over whether the concessions would have an EU or wider geographical impact, these people said, adding that questions remained over the price that Microsoft would charge for Teams to ensure fair competition.

People with knowledge of the matter said talks this week had focused on ways to avoid a formal investigation, but they added that it was “very unlikely” Microsoft would avoid one.

“We continue to engage cooperatively with the commission in its investigation and are open to pragmatic solutions that address its concerns and serve customers well,” said Microsoft.

The commission gave “no specific comment”, adding that the “assessment of the complaint based on our standard procedures is ongoing”.

The probe comes as political pressure against Microsoft grows. Stéphanie Yon-Courtin, an MEP who has a prominent role in tech discussions in Brussels, put pressure on the commission last week to force Microsoft to give concessions that would ease competition concerns.

“Three years after the [Slack] complaint was lodged, Microsoft’s dominant position in the market has grown, while the complainant is still waiting for meaningful progress in this case,” wrote the MEP representing the political group Renew Europe. She pointed to figures that showed Teams had amassed about 270mn users while Slack had about 20mn.

At the time of the complaint, Slack, which has since been acquired by Salesforce, asked EU regulators to move fast “to ensure Microsoft cannot continue to illegally leverage its power from one market to another by bundling or tying products”.

The upcoming probe is Microsoft’s first antitrust investigation in Brussels since 2008. Brussels then accused the company of abusing its dominant position by forcing users to download its Internet Explorer browser, which came bundled with Windows.

Microsoft reached a settlement with the commission, which gave users the option to choose a browser. But in 2013, the EU fined Microsoft €561mn for failing to fulfil its commitment. – Copyright The Financial Times Limited 2023