Tech

The European Commission website has today published a press release stating that the Commission has informed Microsoft of its preliminary view that Microsoft has breached EU anti-competition regulations by tying its communication and collaboration product Teams to its popular productivity applications included in its Office 365 and Microsoft 365 business suites.

Teams is a cloud-based communication and collaboration tool. It offers functionalities such as messaging, calling, video meetings and file sharing; it brings together Microsoft’s and third-party workplace tools and other applications.

In its investigation, the Commission found that Microsoft is dominant worldwide in the market for SaaS productivity applications for professional use. Since at least April 2019, Microsoft has been tying Teams with its core SaaS productivity applications, thereby restricting competition on the market for communication and collaboration products and defending its market position in productivity software and its suites-centric model from competing suppliers of individual software.

In particular, the Commission is concerned that Microsoft may have granted Teams a distribution advantage by not giving customers the choice of whether or not to acquire access to Teams when they subscribe to MS’ SaaS productivity applications. 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.

If confirmed, these practices would infringe Article 102 of the Treaty on the Functioning of the European Union (‘TFEU’), which prohibits the abuse of a dominant market position.

After the Commission opened proceedings in July 2023, Microsoft introduced changes in the way it distributes Teams, particularly by starting to offer some suites without Teams. The Commission preliminarily finds that these changes are insufficient to address its concerns and that more changes to Microsoft’s conduct are necessary to restore competition.

Speaking about the Commission’s decision, Margrethe Vestager, Executive Vice-President in charge of competition policy, said:

We are concerned that Microsoft may be giving its own communication product Teams an undue advantage over competitors, by tying it to its popular productivity suites for businesses. And preserving competition for remote communication and collaboration tools is essential as it also fosters innovation on these markets. If confirmed, Microsoft’s conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns.

In 2007 the Commission initiated legal proceedings against Microsoft for abuse of its dominant position in the market. The case started as a complaint from Sun Microsystems over Microsoft’s licensing practices in 1993 and eventually resulted in the EU ordering Microsoft to divulge certain information about its server products and release a version of Microsoft Windows without Windows Media Player. The European Commission focused especially on interoperability – characteristic of a product or system to work with other products or systems.