Microsoft to face EU competition probe over Teams and Office bundling

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Microsoft is set to be formally investigated by the EU over claims it is unfairly bundling its Teams videoconferencing app with its Office software, as the European Commission turns up the heat on the tech giant.

The commission is set next week to open a formal probe into allegations that Microsoft is abusing its dominant position — the first such investigation for more than a decade — after deeming concessions by the US group insufficient, four people with direct knowledge of the competition watchdog’s thinking said on Monday.

Two of the people added that the commission could issue formal charges against Microsoft as early as the autumn.

The Financial Times reported in April that Microsoft had offered in talks with the EU to stop forcing Office customers to have Teams automatically installed on their devices as well. This followed a complaint in 2020 to Brussels by Microsoft’s rival Slack that alleged that such bundling of the two services broke EU competition law.

But the people knowledgeable about the case said the talks had stalled over whether Microsoft’s proposed concessions would only apply to the EU, with Brussels calling for them to be implemented worldwide

The people added that, even though talks to reach a deal were continuing this week, it was “very unlikely” Microsoft would succeed in avoiding a formal investigation.

Microsoft’s looming antitrust problems with the EU come as the software giant appears to be overcoming regulators’ objections to its contentious $75bn purchase of Activision Blizzard, the games company.

Last week US courts overturned the Federal Trade Commission’s attempts to block the deal, which has already been approved by the EU, while the UK’s Competition and Markets Authority opened the way to clearing the acquisition despite initially prohibiting it.

Brussels has been stepping up antitrust actions against other large US tech companies. Apple, Google and Meta are all facing commission probes for alleged anti-competitive behaviour.

But 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.

In recent years Microsoft has sought to avoid legal battles in Europe that resulted in about €2bn in fines in the past. Its efforts to make concessions to head off an investigation in the Teams case contrast with the aggressive stance it took against the commission when it faced previous competition complaints more than two decades ago.

Microsoft said it was continuing “to engage cooperatively with the commission in its investigation” and was “open to pragmatic solutions that address its concerns and serve customers well”.

The commission gave “no specific comment”, adding that it was still conducting its assessment of the complaint at the heart of the case “based on our standard procedures”.

Stéphanie Yon-Courtin, an MEP with the liberal Renew group and a former adviser to the French competition authority, called on the commission last week to step up pressure on Microsoft to make further concessions. 

“Three years after the [Slack] complaint was lodged, Microsoft’s dominant position in the market has grown, while the complainant is still waiting for meaningful progress in this case,” she wrote, adding that Teams had amassed about 270mn users globally while Slack had about 20mn.

At the time of the complaint, Slack, which has since been acquired by Salesforce, asked EU regulators to move fast “to ensure Microsoft cannot continue to illegally leverage its power from one market to another by bundling or tying products”.