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EU Presses Forward with Microsoft Teams Antitrust Probe Despite Unbundling

• By Gladys Rama
• June 25, 2024

Antitrust allegations related to Teams continue to dog Microsoft in the European Union.

The European Commission, which polices competition practices in that region, on Tuesday issued a "Statement of Objections" to Microsoft over potential antitrust violations stemming from Microsoft Teams.

Specifically, the agency is investigating whether Teams has an unfair advantage over other collaboration products due to its ties with the Microsoft 365 productivity suite. For years, Microsoft sold Teams as part of Microsoft 365, meaning the chat solution inherited an immense built-in user base. As of Microsoft's last count, Teams' monthly active user base is 320 million and Microsoft 365's 400 million.

Competitors may be hard-pressed to make market inroads against such a juggernaut, the regulators said.

"[T]he Commission is concerned that Microsoft may have granted Teams a distribution advantage by not giving customers the choice whether or not to acquire access to Teams when they subscribe to their SaaS productivity applications," the announcement said. "This advantage may have been further exacerbated by interoperability limitations between Teams' competitors and Microsoft's offerings. The conduct may have prevented Teams' rivals from competing, and in turn innovating, to the detriment of customers in the European Economic Area."

This is not a new worry; the European Commission first began its inquiry into Teams-related antitrust practices nearly a year ago, prompted by complaints from collaboration solution providers Slack Technologies and Alfaview.

In response, Microsoft last fall said it would unbundle Teams from its broader productivity suite in the European Union and Switzerland. As of last October, sales of Teams in those regions were no longer tied to sales of Microsoft 365 or Office 365. Microsoft instead began offering a standalone Teams product, as well as "no Teams" versions of Microsoft 365 and Office 365 SKUs.

At that time, Microsoft said it hoped "these changes balance the interests of our competitors with those of European business customers, providing them with access to the best possible solutions at competitive prices."

Earlier this year, Microsoft went a step further and unbundled Teams worldwide, impacting virtually all new customers.

However, these concessions don't go far enough, according to the European Commission, which said it "preliminarily finds that these changes are insufficient to address its concerns and that more changes to Microsoft's conduct are necessary to restore competition."

Tuesday's Statement of Objections is just one step in a longer antitrust investigation, the timeline of which is indefinite. Having received the European Commission's objections, Microsoft is now invited to review the evidence against it, then request a meeting to present its case in front of EU antitrust regulators. If Microsoft is still found in violation of antitrust laws, the European Commission can fine it as much as 10 percent of its annual revenue, as well as require more changes to "bring the infringement effectively to an end."