Microsoft could be hit with a massive fine in the European Union for “potential abuse” of bundling Teams with its Office 365 and Microsoft 365 for business software packages.
On Tuesday, the European Commission (EC) announced the preliminary findings of an investigation into whether Microsoft’s “business model focused on a suite combining multiple types of software in a single offering” unfairly excluded rivals in the software-as-a-service (SaaS) market. .
“Since at least April 2019,” the EC found, Microsoft’s practice of “bundling Teams with its core SaaS productivity applications” potentially restricted competition in the “market for communication and collaboration products.”
The EC is also “concerned” that the practice may have helped Microsoft defend its dominant position in the market by excluding “competing suppliers of individual software” such as Slack and German video conferencing software Alfaview. The makers of these competing products complained to the EC last year, triggering an ongoing investigation into Microsoft’s bundling.
Customers should have a choice, the EC said, and Microsoft seems to have tried at every turn to lock customers into using only its software instead.
“Microsoft may have given Teams a distribution advantage by not giving customers a choice about whether to access Teams when they subscribe to their SaaS productivity apps,” EC wrote. This alleged unfair practice “may have been further exacerbated by limiting interoperability between Teams’ competitors and Microsoft’s offerings.”
For Microsoft, the EC’s findings are probably not entirely unexpected, although Tuesday’s announcement must be disappointing. The company hoped to avoid further scrutiny by introducing some major changes last year. Most drastically, Microsoft began “offering some kits without teams,” the EC said, but even that was not enough to appease EU regulators.
“The Commission has provisionally found that these changes are not sufficient to address its concerns and that further changes in Microsoft’s conduct are necessary to restore competition,” the EC said, concluding that “this conduct may have prevented Teams’ competitors from competing and subsequently innovating.” , at the expense of customers in the European Economic Area.”
Microsoft will now have the opportunity to defend its practices. If the company fails, it risks a potential fine of up to 10 percent of its annual global turnover and a contract that could impact how the world’s leading company does business.
In a statement to Ars, Microsoft president Brad Smith confirmed that the tech giant will work with the commission to find a better solution.
“Having separated Teams and taken initial steps on interoperability, we appreciate the additional clarity we provided today and will work to find solutions to address the commission’s remaining concerns,” Smith said.
In her statement, the EC’s executive vice-president in charge of competition policy, Margrethe Vestager, explained why the commission refuses to back down from a detailed investigation into Microsoft’s alleged unfair practices.
“We are concerned that Microsoft may be giving its own Teams communications product an undue advantage over the competition by bundling it with its popular enterprise productivity suites,” Vestager said. “And maintaining competition in remote communication and collaboration tools is critical because it also drives innovation” in these markets.
Changes in EU antitrust law in 2025
The EC initially launched an investigation into Microsoft’s alleged misuse of Teams last July. Its investigation came after the makers of Slack and Alfaview complained that Microsoft may be in breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU), “which prohibits the abuse of a dominant market position”.
Almost a year later, there’s no telling when the EC’s investigation into Microsoft Teams will end. Microsoft will have the opportunity to review all evidence of the breach collected by EU regulators to formulate its response. After that, the EC will review any additional evidence before making a decision, and there is no statutory deadline for the antitrust investigation to be completed, the EC said.
It is possible that the EC’s decision will come next year, as the EU prepares to issue new guidelines on “vigorous” and more effective enforcement of the TFEU.
Last March, the EC called for feedback from stakeholders after it launched “the first major policy initiative on the abuse of dominance rules”. The initiative sought to update the TFEU for the first time since 2008 based on a review of relevant case law.
“Strong enforcement of the rules on the abuse of a dominant position is beneficial for consumers and for a stronger European economy,” Vestager said at the time. “We have carefully analyzed a number of EU court judgments on the application of Article 102 and it is time for us to start working on guidance reflecting this case law.”