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Microsoft is under formal investigation by EU regulators over allegations of unfair bundling of its Teams video conferencing app with its popular Office software. This move by Brussels is part of its increased scrutiny of large technology companies. The European Commission, the EU’s executive body, expressed concerns that Microsoft could be exploiting its market dominance in productivity software and limiting competition.
The commission is worried that Microsoft may be granting special distribution advantages to Teams by not offering customers a choice in accessing the product. This marks the first investigation against Microsoft in over ten years, triggered by the company’s inadequate measures to ensure fair competition, according to insiders familiar with Brussels’ perspective.
Insiders suggest that formal charges against Microsoft could be issued as early as autumn. The Financial Times previously reported on the impending formal investigation by the EU. Microsoft has stated that it respects the European Commission’s work and is committed to finding solutions that address the concerns raised.
In response, a spokesperson for the European Commission mentioned that they have not received any commitments from Microsoft to resolve the concerns, hence it is premature to discuss potential remedies for any abuse of power.
In recent years, the EU has taken stronger actions against major tech giants from Silicon Valley. Margrethe Vestager, who oversees competition and digital policy within the EU, has even threatened to divide Google. This investigation into Microsoft comes three years after Slack, now owned by Salesforce, filed a complaint against Microsoft for leveraging its dominance to undermine competitors by linking Teams to its Office 365 suite of tools.
During negotiations with antitrust investigators, Microsoft agreed to stop automatically installing Teams on users’ devices. However, discussions hit a roadblock regarding whether this change should be implemented globally or only within the EU’s 27 member states.
Regulators and rivals alike are concerned about the pricing of Teams if it is no longer bundled with Office software. Competitors, such as Slack, fear being undercut by Microsoft. However, raising prices could be seen as detrimental to consumers. This creates a challenging predicament for the European Commission.
Notably, this investigation against Microsoft is the first of its kind by Brussels since 2009 when the commission accused the company of tying Internet Explorer to its Windows operating system. Microsoft eventually reached a settlement with the commission, allowing users to choose their preferred browsers. However, in 2013, the EU imposed a €561mn fine on Microsoft for failing to fulfill its promise.
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