Microsoft charged with EU antitrust violations for bundling Teams

EU regulators have charged Microsoft with illegally bundling its Teams chat app with its Office 365 and Microsoft 365 subscriptions. It’s the first time Microsoft has been charged with antitrust violations in the EU for 15 years, following two big cases related to Windows Media Player and Internet Explorer bundling.

“The European Commission has informed Microsoft of its preliminary view that Microsoft has breached EU antitrust rules by tying its communication and collaboration product Teams to its popular productivity applications included in its suites for businesses Office 365 and Microsoft 365,” says the European Commission in a statement today.

Microsoft has now been handed a statement of objections, a list of the EU’s concerns over its Teams bundling. The software giant unbundled Teams from Office in Europe last year in an attempt to address regulator concerns, and then spun off Teams from Office 365 as its own separate app globally. The unbundling hasn’t been enough to prevent charges, though.

“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 businesses,” says Margrethe Vestager, the head of competition policy in Europe. “If confirmed, Microsoft’s conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns.”

Microsoft says it is working with the EU to find solutions. “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,” says Microsoft president Brad Smith in a statement to the Financial Times.

EU lawmakers first opened a Microsoft antitrust investigation into Teams bundling last year, following an anti-competitive complaint filed by Slack in July 2020. Slack’s original complaint alleged that Microsoft had “illegally tied” its Microsoft Teams product to Office and is “force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers.”

“The Statement of Objections issued today by the European Commission is a win for customer choice and an affirmation that Microsoft’s practices with Teams have harmed competition,” Sabastian Niles, president and chief legal officer of Salesforce, Slack’s parent company, says in a statement. “We appreciate the Commission’s thorough investigation of Slack’s complaint and urge the Commission to move towards a swift, binding, and effective remedy that restores free and fair choice and promotes competition, interoperability, and innovation in the digital ecosystem.”

If Microsoft is found guilty of antitrust violations, the firm could face a fine of up to 10 percent of the company’s annual worldwide turnover. The European Commission could also impose remedies to force Microsoft to change its software products, much like it has in the past.

In 2004 the European Commission ordered Microsoft to offer a version of Windows without Media Player bundled, which resulted in a Windows XP N version available only in EU markets. In 2009 Microsoft was also forced to implement a browser ballot box in its Windows operating system to ensure users were presented with a choice of web browsers, after years of Microsoft bunding Internet Explorer with Windows. Microsoft was then fined $730 million in 2013 for failing to include the browser ballot in Windows 7 SP1.

Update June 25th: Added statement from Salesforce.