Brussels accused Microsoft of illegally abusing its dominance in the business software market at the expense of smaller rivals, following a complaint filed at the height of the pandemic by US competitor Slack.
European Commission he said on Tuesday said Microsoft had been restricting competition by selling its Teams videoconferencing software bundled with the company’s other popular office tools, such as Office 365 and Microsoft 365, since at least 2019.
“We are concerned that Microsoft may be giving its own Teams communications product an unfair competitive advantage by bundling it with popular business productivity suites,” EU competition chief Margrethe Vestager said in a statement. “If confirmed, Microsoft’s conduct would be illegal under our competition rules.” The allegations announced Tuesday are only a “preliminary view,” meaning the commission has sent Microsoft a “statement of objections” and the company has 10 weeks from receiving all the details to respond.
The allegations against Microsoft come in the same week in which the European Commission also accused Apple of violating the novel EU Digital Markets Act by preventing app developers from communicating freely with users. Over the past decade, the EU has become the de facto regulator of Large Tech, forcing US giants to change the way they operate and imposing multi-billion dollar fines.
In an attempt to composed Brussels, Microsoft began excluding Teams from some Office suites last July. However, the Commission today said these changes were insufficient and expressed concern about the ease of using competing conferencing software in conjunction with other Microsoft tools, a practice known as interoperability.
“With Teams unbundled and taking initial steps toward interoperability, we appreciate the additional clarity provided today,” Brad Smith, vice president and president of Microsoft, said in a statement shared with WIRED. He added that the company plans to work on finding solutions that will dispel the Commission’s remaining doubts.
If Microsoft and the EU fail to reach an agreement, the Commission has the power to impose financial penalties of up to 10 percent of the company’s annual global turnover and may impose corrective measures on it.
The commission opened an investigation into Microsoft Teams following a complaint filed by Slack in July 2020, when there was fierce competition for remote workers who were relying on the office software due to pandemic lockdowns. “This is a much bigger deal than Slack vs. Microsoft” – Jonathan Prince, then vice president of communications and policy at Slack, he said then. “This represents two very different philosophies about the future of digital ecosystems, gateways and gatekeepers.”
On Tuesday, Sabastian Niles, president and chief legal officer of Salesforce, Slack’s parent company, described the European Commission’s position as “a victory for customer choice and an acknowledgment that Microsoft’s Teams practices have harmed competition.”
German videoconferencing company Alfaview, which filed a complaint with the commission over Slack, also welcomed the decision. The measures Microsoft has taken so far to separate Teams have been ineffective, said Niko Fostiropoulos, CEO and founder of Alfaview, he said in a statement. “Microsoft is only offering a minimal discount of €2 ($2.10) to existing enterprise customers who are opting out of Teams across the entire suite,” he said. “This does not provide sufficient incentive to switch to another video conferencing service.”