EU Launches Antitrust Investigation Over Microsoft Teams Bundling

Microsoft’s decision to bundle its Teams software with its Office productivity suite has become the subject of a formal antitrust investigation by the European Commission. In July 2020, just a few months after a global epidemic began and the Microsoft Teams user base began to soar, Slack initially lodged an anti-competitive case against Microsoft with the European Commission.

The European Commission will now set to conduct a thorough investigation to see whether Microsoft’s decision to tie or bundle Microsoft Teams with its Office 365 and Microsoft 365 productivity suites may have violated EU competition laws.

According to Vestager, executive vice president in charge of competition policy at the European Commission, “Remote communication and collaboration tools like Teams have become indispensable for many businesses in Europe.” Margrethe further explains “We must therefore ensure that the markets for these products remain competitive, and companies are free to choose the products that best meet their needs. This is why we are investigating whether Microsoft’s tying of its productivity suites with Teams may be in breach of EU competition rules.”

Microsoft has addressed the EU’s concerns, in a statement by Microsoft spokesman Robin Koch “We respect the European Commission’s work on this case and take our own responsibilities very seriously. We are committed to working with the Commission and to finding answers that will resolve its concerns.

According to Slack’s complaint, Microsoft had “illegally tied” its Microsoft Teams product to Office and was forcing it on millions of people, preventing its removal, and concealing the true cost to enterprise customers. Now that Microsoft reportedly provided a compromise to the EU to stop bundling Teams with Office, EU officials are completely looking into the problem. The Financial Times recently reported that EU regulators and Microsoft couldn’t agree on whether the elimination of bundling would be confined to just the EU and how prices might be influenced to guarantee competition is still fair. Clearly, this wasn’t enough to avoid a formal antitrust inquiry.

Additionally, Microsoft recently decided to discontinue the integration of Microsoft Teams with Windows 11. The important enterprise users who were the subject of Slack’s concern were never able to use the Chat feature in Windows 11, only consumers. However, Microsoft might have later added enterprise support to this built-in version, and it’s likely that the EU investigation scared Microsoft into completely abandoning the integration.

After two significant instances involving the bundling of Windows Media Player and Internet Explorer, this is the first antitrust investigation against Microsoft in the EU in nearly 15 years. Microsoft was required to provide a version of Windows in 2004 by the European Commission without the included Media Player. A Windows XP N version became released in EU markets as a result.

The EU also looked at the idea of bundling Internet Explorer with Windows in 2009, and Microsoft ultimately decided to sell a version of Windows 7 E without Internet Explorer in Europe. To ensure customers have a choice of online browsers, Microsoft was compelled to add a browser ballot box to its Windows operating system. In the end, Microsoft was penalized $730 million for skipping the browser ballot in Windows 7 SP1.