The European Commission this week informed Microsoft of its preliminary finding that the company was violating EU antitrust rules by tying Teams, its workplace communication and collaboration application, to the widely used Office 365 and Microsoft 365 productivity suites.
Forcing customers to access Teams as part of the company’s business application suites – if that is the final determination – violates Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) which bars the abuse of a dominant market position, the EC says.
Business software companies like Microsoft and Google are increasingly offering cloud-based software as a service (“SaaS”). While this enables new market players to offer SaaS solutions and allows customers to use various software from different providers, the EC says, “Microsoft has a suite-centric business model combining multiple types of software in a single offering.”
When Teams was launched, it was included in Microsoft’s cloud-based productivity suites for business customers, Office 365 and Microsoft 365, which are used by more than 345 million people worldwide. According to Statista, as of February 2024, Microsoft controls 30% of the global digital office suite market. Google’s G Suite’s market share has grown to 44%.
The Commission is concerned that, since at least April 2019, Microsoft has been exploiting and solidifying its dominant position – and restricting competition – by tying Teams with its core SaaS productivity applications.
A Distribution Advantage
Tying the products this way gives Teams a distribution advantage, the EC says, because customers are forced to acquire Teams when they subscribe to Microsoft’s 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,” the EC charges.
Microsoft introduced changes in the way it distributes Teams after the EC launched its investigation nearly a year ago, offering some suites without Teams. That was not enough, the Commission found, saying more is needed to restore competition.
The Commission opened its investigation on July 27, 2023, following a complaint by Slack Technologies, Inc, which is now owned by Salesforce, Inc. A second complaint was lodged by alfaview GmbH, a German-based videoconferencing application company. The Commission is also investigating that complaint.
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