The European Commission could imposed a fine on Microsoft for illegally bundling its Teams app with its popular Office productivity suites.
This fine will be the first antitrust penalty for Microsoft in two decades, following a previous €2.2 billion ($2.4 billion) fine for similar violations.
This photograph taken in Davos on January 19, 2023 shows the logo of the American corporation Microsoft. (Photo by Fabrice COFFRINI / AFP) Photo by FABRICE COFFRINI/AFP via Getty Images
Microsoft Fined for Bundling Teams with Office
Microsoft's move to integrate Teams into Office 365 for free in 2017, replacing Skype for Business, significantly boosted Teams' popularity, especially during the COVID-19 pandemic.
This move, however, drew criticism from competitors who argued that bundling gave Microsoft an undue advantage in the burgeoning market for communication and collaboration tools.
The EU investigation, which could led to a fine, was triggered by a complaint filed in 2020 by Slack, a workspace messaging app owned by Salesforce. Slack argued that Microsoft's practice of bundling Teams with Office 365 and Microsoft 365 gave Microsoft an unfair advantage in the market.
The European Commission claims that Microsoft has been bundling its Teams software with its main productivity apps since April 2019. This limited customer options and made it harder for Teams' competitors to work with Microsoft products, putting them at a significant disadvantage.
Margrethe Vestager, the EU antitrust chief, stressed the importance of maintaining competition in the market for remote communication and collaboration tools, stating, "Preserving competition for remote communication and collaboration tools is essential as it also fosters innovation on these markets."
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Microsoft Addresses Regulatory Actions
In response to the investigation, Microsoft made efforts to address the Commission's concerns. Reuters reports that Microsoft President Brad Smith mentioned that the company had unbundled Teams and taken steps towards improving interoperability.
He stated, "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." However, the European Commission found these measures insufficient to restore fair competition.
Despite these steps, the Commission concluded that more changes were necessary. The regulator's preliminary findings indicated that Microsoft's bundling practices potentially infringed Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits the abuse of a dominant market position.
If the Commission's preliminary findings are confirmed, Microsoft could face a fine of up to 10% of its global annual turnover.
In Other News
The EU has accused Apple of violating the Digital Markets Act (DMA) for the first time. The DMA, a regulation to limit the power of big tech companies, requires them to allow app developers to offer alternative purchasing options outside their platform.
The EU claims Apple's App Store rules prevent this, stopping developers from telling customers about cheaper alternatives. EU Commissioner Thierry Breton stated they believe this is a violation of the DMA.
