Microsoft accused of 'possibly abusive' practices by European Commission for bundling Teams and Microsoft 365

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The European Commission believes Microsoft may have abused the dominance of Office and Microsoft 365 to push Microsoft Teams unfairly.

Microsoft Teams on Android
Microsoft is accused of using its dominance in the productivity software space to gain an unfair advantage for Microsoft Teams. (Image credit: Future)

What you need to know

  • The European Commission has shared its preliminary view with Microsoft that the tech giant has breached EU antitrust rules by bundling Microsoft Teams with Microsoft 365.
  • The Commission's view is that Microsoft relayed dominance in the productivity software space to restrict competition for communication and collaboration tools.
  • Microsoft started offering some suites of productivity software without Teams in July 2023, but the European Commission preliminarily found the changes to be "insufficient."

Microsoft finds itself under the microscope of the European Commission once again. The tech giant has been informed that the European Commission has preliminarily found Microsoft to be in violation of antitrust rules. The situation revolves around Microsoft's bundling of Teams with Microsoft 365, which came under legal scrutiny in Europe last summer.

The European Commission opened its investigation of Microsoft's bundling practices in July 2023. At the core of the investigation is a single question: Has Microsoft abused its dominance in the productivity software space to create an unfair advantage for Microsoft Teams?

"Remote communication and collaboration tools like Teams have become indispensable for many businesses in Europe," said Margrethe Vestager, Executive Vice-President in charge of competition policy back in July 2023.

"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."

Almost one year later, it appears the European Commission has found, at least preliminarily, that Microsoft did abuse its dominant market position. Part of the European Commission's press release states:

"The Commission preliminarily finds that Microsoft is dominant worldwide in the market for SaaS productivity applications for professional use.

The Commission is concerned that, since at least April 2019, Microsoft has been tying Teams with its core SaaS productivity applications, thereby restricting competition on the market for communication and collaboration products and defending its market position in productivity software and its suites-centric model from competing suppliers of individual software."

A key concern of the Commission is that Microsoft may have gained a "distribution advantage" since for several years it was not possible for organizations to subscribe to Microsoft 365 without also getting access to Microsoft Teams. Interoperability limitations between Teams and productivity suites other than Microsoft 365 may also be a contributing factor.

What's next for Microsoft Teams?

Microsoft Teams on Windows

Microsoft may have to take further action to separate Teams from Microsoft 365 to become compliant with EU law. (Image credit: Future)

At this point, the European Commission's view is only preliminary. If that view is confirmed through further investigation, Microsoft would be in violation of Article 102 of the Treaty on the Functioning of the European Union.

Earlier this year, Microsoft began offering Teams as a standalone app and gave organizations the option to subscribe to Microsoft 365 without gaining access to Teams. Microsoft announced the decision shortly after the European Commission opened its investigation into bundling practices. But these changes are "insufficient" in the eyes of the European Commission. The body states that "more changes to Microsoft's conduct are necessary to restore competition."

Now that the European Commission has shared its preliminary findings, Microsoft has the right to look at the documents from the Commission and reply in writing. Microsoft also has the option to request an oral hearing to present a case to the European Commission and national competition authorities.

If after that process the European Commission finds that Microsoft is in violation of Article 102 of the Treaty on the Functioning of the European Union, the governing body can prohibit Microsoft from the conduct in question and impose a fine up to 10% of Microsoft's annual worldwide turnover. Alternatively, the Commission can make Microsoft apply remedies to the situation that would make Microsoft's conduct in line with Article 102.

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Sean Endicott
Sean Endicott
News Writer and apps editor

Sean Endicott is a tech journalist at Windows Central, specializing in Windows, Microsoft software, AI, and PCs. He's covered major launches, from Windows 10 and 11 to the rise of AI tools like ChatGPT. Sean's journey began with the Lumia 740, leading to strong ties with app developers. Outside writing, he coaches American football, utilizing Microsoft services to manage his team. He studied broadcast journalism at Nottingham Trent University and is active on X @SeanEndicott_ and Threads @sean_endicott_. 

2 Comments Comment from the forums
  • GraniteStateColin
    This is the disgusting consequence of giving government too much power and is a perfect example of the corrupting consequence to allowing governments to meddle in the private affairs of businesses like this. The individuals involved invariably bring their own biases (we all have them, the problem is when we think it's OK to force them on others, and that's what governments tend to do -- what else can you do with all that power?) and end up choosing sides between competing companies, instead of letting them fight it out for the good of customers.

    The very notion that it's "abusive" is absurd. Unless it's based on limited access to specific natural resources (never the case with these tech issues), a monopoly that's bad for customers can't stand in the long term without support from the government (e.g., prohibiting or regulating business practices to require features owned by the market leader -- a common consequence of heavy lobbying by the big companies that can afford it, which is why regulations ALWAYS help the big companies and hurt the small scrappy newcomers). There's no point in spending big bucks to lobby a small government. Big government drives the lobbying industry, as all that power attracts people attempting to influence it for their benefit. So, if you want to reduce money in politics, first you limit what government is allowed to do to its people and businesses, then Slack and MS don't spend as much as small country GDPs to influence the various governments where they conduct business. They'll only spend that where they believe there's a receptive audience with the power to help them.

    Otherwise, upstart competitors always find clever ways to solve the problems the market leader is causing (whether it's high prices, lack of features, whatever). Beating competitors is not a problem for consumers. It's a problem for the competitors and they need to fight harder to win customers. That's the ONLY way to ensure that customers win.

    If competitors can instead turn to the government for assistance, that merely ensures they don't work as hard to woo and delight customers, which is BAD for customers in the long run.

    This is the legacy of this EU state of affairs, short-term apparent wins (yay, Apple will now use USB-C) that yield a long-term reduction in innovation and worse conditions for consumers.
    Reply
  • GraniteStateColin
    And for those irrational anti-MS people or big-government people who believe "big corporations need big government to regulate them" just look at areas where MS had a dominant position and lost it. Not because government dismantled it, but because competition took it from them as they rested on their laurels (browsers, mobile). Slack, which had a near "monopoly" in this space, fell to Teams because Teams is better for many use-cases (not all). Part of the reason it's better is because of its integration with Office and SharePoint -- that's a GOOD THING that the EU is saying is abusive, because bureaucracy.

    This would be like saying that including copy and paste functionality at the OS level is abusive. Or bundling a camera and music player and GPS with a phone is monopolistic behavior that could hurt camera makers and MP3 manufacturers and GPS devices (yup, they're largely gone, and that's OK -- adapt or die). Where do you draw the line? The answer is: you don't. You leave it to the market to fight it out and let the consumers vote with their dollars. That's the ONLY way to ensure the most efficient, cost-effective, best solutions win. EVERYTHING ELSE yields worse outcomes in the long-run.

    Yes, you can get some short-term wins through government mandates, forcing changes that appear popular in the moment, but they always distort and harm the market in the long-run.
    Reply