In 2020, the European Commission investigated Microsoft after a complaint by Slack alleging the unfair promotion of Teams. The EC is now accusing Microsoft of anticompetitive behavior for bundling Teams with the Office suite.
Omdia view
Summary
In 2020, the EU’s European Commission (EC) investigated Microsoft after a complaint by Slack alleging the unfair promotion of Teams. Subsequently, the EC is now accusing Microsoft of anticompetitive behavior for bundling Teams with the Office suite, an accusation likely to have broader ramifications in the unified communications market.
Microsoft Teams and EU antitrust developments
In a recent conversation with Principal Analyst Adam Holtby, I discussed the five main categories that can shift competitive advantage and disrupt a market:
- New technology
- New or changing buyer needs and preferences
- Shifting input costs or availability (the resources a vendor needs to produce the goods and services it makes)
- The emergence of a new industry segment
- Changes in legal rules or regulations
Competition law is confronted with several challenges, including duopolies in digital markets and a polarized debate influenced by lobbying from supporters and opponents of tech regulation. In the US, there has also been a strong reluctance to intervene in markets because of fears that excessive enforcement could stifle competition. The prevailing belief is that digital markets move so quickly that interference might discourage businesses from innovating in ways that could benefit customers. The common view has been to leave the market alone and let it correct itself in due time.
However, Microsoft Teams is facing disruption to its market-leading position in unified communications because of changes in legal rules and regulations. The EC initiated an investigation after a complaint by Slack in 2020 that alleged that Microsoft was unfairly promoting Teams. The EC has charged Microsoft with anticompetitive behavior, particularly because of the bundling of Teams with the Office suite, a move that potentially harms its competitors.
In response to the EC’s investigation, Microsoft has made concessions such as unbundling Teams from Office within the EU in 2023, and it is now rolling the change out globally. It is seeking to settle the case to avoid formal charges and potential fines of up to 10% of Microsoft’s global revenue. The EC may also impose on the company any remedies that are proportionate to effectively end the infringement.
The EC is suggesting that additional changes are necessary to restore competitive balance. The investigation is ongoing, and there is no set deadline for the EC to complete antitrust inquiries into Microsoft’s alleged anticompetitive conduct.
Other EU antitrust developments
Microsoft has faced several fines from the EU over the years, including a €561m ($599m) fine in 2013 for not complying with a web browser choice promise made to the EC in 2009. Beyond Microsoft Teams, the vendor is also facing scrutiny for its partnerships with artificial intelligence (AI) startups and licensing agreements for cloud computing after a complaint was launched by the Cloud Infrastructure Services Providers in Europe (CISPE). These cases demonstrate how the EU’s regulatory oversight affects Microsoft and other major tech companies.
The EC has investigated several tech companies because of concerns about their market dominance. Apple has been accused of breaking new digital competition rules by restricting app developers’ ability to direct consumers to more affordable services, the first accusation under the EU’s Digital Markets Act (DMA), which aims to reduce the influence of big tech companies.
For Microsoft to avoid EU antitrust fines, the company may need to take drastic measures such as allowing Microsoft Teams to work seamlessly with other communication platforms, including Zoom, Cisco Webex, and Slack. This step would enhance user experience, show commitment to fair competition, and reduce antitrust risks. However, since there is no current deadline for a resolution, Omdia expects that a long time will pass before definitive action is taken by Microsoft to comply with the EC’s ruling.
Appendix
Further reading
Omdia’s Digital Workplace Research Community (June 26, 2024) “Workplace Pulse #1: Microsoft and the EU antitrust situation,” LinkedIn, available at www.linkedin.com/feed/update/urn:li:activity:7211683761267056640?utm_source=share&utm_medium=member_desktop
European Commission (July 27, 2023) “Antitrust: Commission opens investigation into possible anticompetitive practices by Microsoft regarding Teams,” available at https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3991
European Commission (March 25, 2024) “Commission opens non-compliance investigations against Alphabet, Apple and Meta under the Digital Markets Act,” available at https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1689
European Commission (June 25, 2024) “Commission sends Statement of Objections to Microsoft over possibly abusive tying practices regarding Teams,” available at https://ec.europa.eu/commission/presscorner/detail/en/ip_24_3446
Microsoft (August 31, 2023) “Microsoft announces changes to Microsoft 365 and Office 365 to address European competition concerns,” available at https://blogs.microsoft.com/eupolicy/2023/08/31/european-competition-teams-office-microsoft-365/
Microsoft (April 1, 2024) “Realigning global licensing for Microsoft 365,” available at www.microsoft.com/en-us/licensing/news/Microsoft365-Teams-WW?ranMID=24542&ranEAID=nOD/rLJHOac&ranSiteID=nOD_rLJHOac-4omLss9rshQK02j5GSTLzA&epi=nOD_rLJHOac-4omLss9rshQK02j5GSTLzA&irgwc=1&OCID=AIDcmm549zy227_aff_7593_1243925&tduid=%28ir__dowwiqqbkkkfdmlxhosaf33sj32xf0po6nhezcmn00%29%287593%29%281243925%29%28nOD_rLJHOac-4omLss9rshQK02j5GSTLzA%29%28%29&irclickid=_dowwiqqbkkkfdmlxhosaf33sj32xf0po6nhezcmn00
Author
Tim Banting, Practice Leader, Digital Workplace