EU investigates Microsoft’s bundling of Teams with Office software package

EU regulators have opened a formal investigation into claims that Microsoft is unfairly bundling its Teams video conferencing app with its popular Office software as Brussels intensifies its scrutiny of big technology groups.

The European Commission, the executive body of the EU, said on Thursday that it feared Microsoft “may be abusing and defending” its market dominance in productivity software “by restricting competition”.

It was concerned the US tech giant may grant Teams “distribution advantages by not giving customers the choice” over access to the product, the statement said.

The move is the first such investigation against Microsoft in more than a decade and comes after rivals said the group’s concessions to stop tying in Teams with its Office 365 software in Europe were insufficient for fair competition, according to multiple people with direct knowledge of Brussels’s thinking.

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The investigation could lead to formal charges against Microsoft as early as the autumn, according to two people with direct knowledge of the matter. The Financial Times first reported that the EU was poised to open a formal probe into the matter last week.

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“We respect the European Commission’s work on this case and take our own responsibilities very seriously,” Microsoft said. “We will continue to co-operate with the commission and remain committed to finding solutions that will address its concerns.”

The EU has stepped up its actions against Silicon Valley giants in recent years. Margrethe Vestager, the bloc’s executive vice-president in charge of competition and digital policy, last month threatened to break up Google.

The investigation into Microsoft comes three years after Slack, now owned by Salesforce, filed a complaint with the EU. The workplace messaging app accused Microsoft of using its dominance to crush competitors by tying Teams to its Office 365 tools.

Microsoft, as part of its negotiations with antitrust investigators, had agreed to stop forcing users to have Teams automatically installed on their devices. But talks stalled over whether Microsoft will implemented globally or only in the bloc’s 27 member states.

Regulators and rivals have concerns over the price Microsoft should charge for Teams if it is no longer linked to Office software. Rivals, such as Slack, fear being undercut by Microsoft.

But if Microsoft raises prices, such a move may be considered bad for consumers. “It puts the commission in a difficult position,” said a person with knowledge of the talks.

The move against Microsoft, the first such Brussels investigation against the group since the commission charged it with tying Internet Explorer to its Windows operating system in 2009, comes after a prolonged truce between the company and the competition watchdog.

Microsoft then reached a settlement with the commission, offering users a choice of browsers. However, in 2013, the EU imposed a €561mn fine on the company for failing to fulfil its promise. – Copyright The Financial Times Limited 2023