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EU charges Microsoft with antitrust violations over Teams

Allegations that software giant gained ‘undue advantage’ by bundling video conferencing app with Office are first such charges against it in over a decade

The move comes as Microsoft is facing heightened scrutiny of its activities. Photograph: Fazry Ismail/EPA

Javier Espinoza
Tue Jun 25 2024 - 14:04

The European Union (EU) has accused Microsoft of anticompetitive behaviour by bundling its Teams app with its Office suite, in the first such antitrust charges brought against the tech group in more than a decade.

The European Commission on Tuesday handed the world’s most valuable public company a charge sheet outlining concerns that Microsoft had given the video conferencing app Teams an “undue advantage”, harming rivals such as Slack and Zoom.

The charges are the biggest that Brussels has filed against Microsoft, apart from merger control, since the group’s showdown with the US and EU over Windows, which began more than 20 years ago. That landmark case also centred on Microsoft’s bundling, or “tying”, of its various software products.

The latest case follows a bruising battle with regulators over Microsoft’s $75 billion (€70 billion) acquisition of Activision Blizzard last year and comes as the company faces scrutiny over its alliances with artificial intelligence start-ups including OpenAI.

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“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 business,” said Margrethe Vestager, the EU’s executive vice-president in charge of competition policy.

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“If confirmed, Microsoft’s conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns.”

In April, Microsoft issued concessions aimed at trying to avert regulatory action, including widening plans to unbundle Teams from other software such as Office beyond Europe. However, officials did not think the move went far enough to enable competition in the market.

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Reacting to the fresh charges, Brad Smith, Microsoft president, said: “Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the commission’s remaining concerns.”

Sabastian Niles, president at Salesforce, which lodged the original complaint against Microsoft, said the charges against Microsoft were “a win for customer choice and an affirmation that Microsoft’s practices with Teams have harmed competition”.

The commission, the EU’s executive arm, said fresh charges did not “prejudge the outcome” of the probe. Microsoft is seeking to settle the case to avoid formal charges that it is breaking the law and a potential hefty fine of up to 10 per cent of its annual global revenues, according to people familiar with the company’s thinking.

The move comes as Microsoft is facing heightened scrutiny of its activities. Regulators are examining the company over its $13 billion partnership with OpenAI, and Brussels is considering launching a full probe.

The group is also facing a complaint over what some competitors argue are unfair licensing agreements for cloud computing.

Brussels is also looking at other big tech companies. On Monday the commission accused Apple of stifling competition on its App Store, marking the first time EU regulators have brought charges against a big tech group under new digital rules. – Copyright The Financial Times Limited 2024

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