EU targets Microsoft Teams bundling, saying it stifles competition

The European Union (EU) accuses Microsoft of foul play after regulators accused the tech giant of unfairly bundling its popular Teams video conferencing software with its Office suite. This practice, the EU says, gives Teams an unfair advantage over competitors like Zoom and Slack.

The issue centers on how Microsoft packages Teams within its Office 365 and Microsoft 365 subscriptions, which include programs like Word, Excel, and Outlook. Regulators believe this bundling essentially forces companies to adopt Teams if they want Microsoft’s other widely used programs. This, they argue, harms competition by limiting customer choice.

This is just the latest chapter in the EU’s ongoing efforts to curb the dominance of big tech companies. Just a day earlier, the EU had attacked Apple for its App Store policies. Other tech giants such as Amazon, Google, Meta, TikTok and an unnamed company (possibly referring to Alphabet, Google’s parent company) are also under investigation for their business practices.

The Microsoft case dates back to the COVID-19 pandemic, when video conferencing tools like Teams, Zoom and Slack became crucial for remote working. In 2020, Slack, now owned by Salesforce, filed a complaint with the EU, alleging that Microsoft’s bundling tactics were anti-competitive, triggering the investigation.

According to the EU, Microsoft has an unfair advantage because it doesn’t give customers the choice of whether they want Teams when purchasing other software. Rival video conferencing companies are also reportedly having difficulty ensuring their products work seamlessly with other Microsoft programs.

“This behavior could have prevented competitors from competing effectively and ultimately stifled innovation, harming customers in the process,” said the European Commission, the EU’s executive branch leading the investigation.

The charges are just the beginning of a long process. Microsoft has the opportunity to respond to the complaint. However, if a deal is not reached, the company could face a hefty fine of up to 10% of its global annual revenue.

This situation is reminiscent of a past antitrust case against Microsoft. Decades ago, the U.S. Department of Justice took legal action against Microsoft for bundling its Internet Explorer browser with the Windows operating system. Eventually the case was solved.

Microsoft says it has already taken steps to address the EU’s concerns. Last year, the company offered Teams as a standalone purchase, separate from its Office products.

“As we separate Teams and take initial steps to ensure compatibility, we appreciate the Commission’s clarification today,” Microsoft president Brad Smith said in a statement. “We will continue to work to find solutions that address the remaining concerns.”

However, the EU claims that Microsoft’s efforts are “inadequate” and calls for further changes to “restore fair competition”, without providing details on what such changes might entail.