The European Union (EU) has formally announced an antitrust investigation into Microsoft's bundling of Teams with Office 365 and Microsoft 365, following a complaint by rival company Slack two years ago.
Slack argued that Microsoft was unfairly bundling the collaboration and communication software with its widely-used cloud-based productivity suites for businesses. The European Commission, which is conducting the probe, will investigate whether Microsoft may have violated EU competition rules by tying or bundling Teams to Office 365 and Microsoft 365.
The Commission has expressed concern that Microsoft might be misusing its market position in productivity software to limit competition in the European Economic Area (EEA) for communication and collaboration products. The focus is on whether Microsoft grants Teams an unfair distribution advantage by not allowing customers to choose whether to include it in their subscriptions, and potentially restricting the interoperability between its productivity suites and competitive offerings.
The Commission stated that Microsoft's practices could be construed as "anti-competitive tying or bundling." These practices could disadvantage suppliers of other communication and collaboration tools, such as Slack, from competing on an even footing.
In 2020, Slack publicly accused Microsoft of illegally bundling Teams into its dominant Office productivity suite, thereby "force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers." Microsoft countered the allegations by stating that the market had "embraced" Teams in "record numbers" due to the COVID-19 pandemic driving the uptake of video conferencing and other digital communication tools.
The EU's decision to investigate Microsoft's practices comes at a time when regulation of digital giants is evolving in the region, potentially affecting the Commission's response to complaints. Furthermore, with the implementation of the Digital Markets Act (DMA) in the EU, which seeks to regulate the most powerful digital intermediaries (so-called "gatekeepers"), Microsoft's operations could soon be under additional scrutiny.
The enforcement of the DMA could compel Microsoft to restrict its methods of operating its popular productivity suites and potentially grant its competitors, like Slack, more leeway in the market.