Microsoft faces EU investigation over Teams and Office bundles

Microsoft will be investigated by the EU for allegedly bundling Teams videoconferencing software with Office. The European Commission is stepping up its pressure on the tech giant.

Four people who have direct knowledge of the thinking of the competition watchdog said that the commission will open a formal investigation next week into allegations that Microsoft abuses its dominant position. This is the first investigation in more than a decade.

Two people said that the Commission could bring formal charges against Microsoft by the fall.

In April, it was reported that Microsoft offered to stop requiring Office customers to also have Teams installed in their devices. Microsoft’s competitor Slack filed a complaint with Brussels in 2020 alleging that the bundling of these two services violated EU competition laws.

The people familiar with the case say that the talks have stalled because of the question whether Microsoft’s concessions will only be applicable to the EU or if they should apply worldwide.

They added that even though Microsoft was continuing to negotiate a deal this week, it would be “very unlikely” for them to avoid a formal investigation.

Microsoft’s antitrust issues with the EU are looming as it appears that the software giant is overcoming regulators objections regarding its controversial $75bn acquisition of Activision Blizzard.

The US Federal Trade Commission was unable to block a deal that has been approved by EU. Meanwhile, the UK Competition and Markets Authority cleared the way for the acquisition, despite its initial opposition.

Brussels has intensified antitrust enforcement against other US technology giants. Apple, Google and Meta all face commission investigations for alleged uncompetitive behavior.

The move against Microsoft is the first investigation by Brussels against the group after the Commission charged it in 2009 with linking Internet Explorer to Windows. It comes following a long truce between Microsoft and the competition watchdog.

Microsoft has been trying to avoid the legal battles that have resulted in around €2bn of fines. Microsoft’s concessions in order to avoid an investigation into the Teams case are in stark contrast to the aggressive approach it took when it was faced with previous complaints about competition more than 20 years ago.

Microsoft stated that it would continue to “engage cooperatively” with the Commission in its investigation and was “open for pragmatic solutions which address its concerns and benefit customers”.

The commission made “no specific comments” and added that it is still assessing the complaint at its core “based on standard procedures”.

Stephanie Yon Courttin, a liberal MEP from the Renew group, and former adviser of the French Competition Authority, called last week on the Commission to increase pressure on Microsoft for further concessions.

She wrote that Microsoft had grown its dominance in the market three years after Microsoft’s [Slack] complaint, but the complainant was still waiting for progress. Teams now had about 270mn global users, while Slack only had around 20mn.

Slack, acquired by Salesforce since then, requested that EU regulators move quickly “to ensure Microsoft can’t continue to illegally leverage their power from one market into another by bundling and tying products”.