Microsoft faces renewed antitrust charges in EU over Teams dominance
Global unbundling of Teams insufficient concession
Microsoft is bracing for a fresh round of antitrust charges in Europe, as the EU Commission prepares to take aim at the tech giant's dominance in the video conferencing market with its Teams software.
The move comes despite Microsoft's offering to unbundle Teams from its Office suite globally in an attempt to appease regulators. It now appears the move wasn't enough to satisfy the European Commission.
Three sources familiar with the situation told The Financial Times that the EU Commission is poised to issue a formal charge sheet against Microsoft, alleging that its practices stifle competition within the video conferencing sector.
At the heart of the concerns lie two key issues: compatibility and user lock-in.
Rivals worry that Microsoft prioritises compatibility between Teams and its own software products, creating an advantage over competing video conferencing apps.
Additionally, the lack of data portability between Teams and other platforms creates a significant barrier for users who might consider switching to alternative services.
The development follows a 2020 complaint filed by Slack, which was later acquired by Salesforce.
In July 2023, the EU opened a preliminary antitrust investigation, saying it was concerned that bundling Teams with other Office products like Word and Excel gives Microsoft an unfair advantage.
In a bid to head off EU's probe, Microsoft announced in August 2023 that it would unbundle Teams from its Microsoft 365 productivity suite. The company also pledged to enhance resources on interoperability, allowing for smoother integration of Microsoft products with competing services.
More recently, the company offered concessions in the form of a global unbundling of Teams, hoping to avoid regulatory action.
"We believe these changes balance the interests of our competitors with those of European business customers, providing them with access to the best possible solutions at competitive prices," Nanna-Louise Linde, vice president of Microsoft European Government Affairs, said in August 2023.
While the exact timing of the European Commission's upcoming charges remains unclear, the FT sources suggest they could arrive within the next few weeks. The timeline is further supported by meetings planned between Microsoft's competitors and the EU Commission this week.
However, sources cautioned that Microsoft could still offer last-minute concessions to derail the case, or the Commission might choose to delay or even scrap the charges altogether.
The potential consequences for Microsoft are significant. If found guilty of breaching EU competition law, the company could face fines as high as 10% of its global annual turnover.
The move against Microsoft reflects a broader trend of heightened scrutiny of big tech companies in Europe.
The EU is currently investigating whether Microsoft's recent $13 billion partnership with OpenAI violates competition regulations.
Additionally, Microsoft finds itself among a group of tech giants, including Google and Meta, designated as "gatekeepers" under the new Digital Markets Act (DMA), imposing specific responsibilities on their operations within the European market.
Furthermore, the company faces complaints from European cloud computing providers who allege that Microsoft leverages its dominant position to force users towards its products and stifle competition from smaller European startups.